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SLANG Worldwide (CNSX:SLNG) CEO on Trulieve Cannabis Corp (CNSX:TRUL) Florida Licensing Deal

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

SLANG Worldwide (CNSX:SLNG) (OTCMKTS:SLGWF) (FRA:84S) CEO Peter Miller is thrilled to have been named by High Times as one of the 100 most influential people in the cannabis industry for 2019. Miller discusses his personal history in the cannabis space and explains why SLANG has not adopted the industry’s popular vertical integration strategy. Miller explains that SLANG is a consumer packaged goods company and believes CPGs represent a normalization of cannabis and substantial growth opportunities. SLANG recently partnered with Florida-based Trulieve Cannabis Corp (CNSX:TRUL) (OTCMKTS:TCNNF) to distribute SLANG’s portfolio of products in Trulieve’s dispensaries. Miller explains that the partnership grants SLANG access to the lucrative Florida market without having to invest significant capital to build infrastructure in the state.

Transcript:

Howard Glassman:   All right, this is going to be interesting. Please help me welcome to the program, the CEO of SLANG Worldwide, and when you see him on camera for the first time, you’re going to think, wait a second, did Peter Miller send his kid? Look at this boy! Look at this nice boy!

Peter Miller: My kid is at home, hopefully watching this on the internet in a couple of hours.

Howard Glassman:   Peter’s kid is Bartholomew. Peter’s the CEO of SLANG Worldwide. SLANG is a – and he’s just been honoured recently as High Times’ 100 most influential people in cannabis for 2019 for their leadership in the cannabis industry. Welcome, Sir, how are you?

Peter Miller: I’m great. Thanks for having me.

Howard Glassman:   It’s quite a ride. Just so people aren’t guessing the entire time you’re here, you told us before we started, you’re 31 years old.

Peter Miller: Yeah, yeah, which is young in absolute terms, although depending on what period of time you’re in, I was either old, late middle age; right now I’m approaching middle age, I suppose. But in cannabis, I’ve been in this since it was legally possible, so I’m as experienced as anybody at this point.

Howard Glassman:   For sure. But no, but just connected your age, though. You’re saying, like, there was a time in our world where 31, you’d have been like, almost done.

Peter Miller: Yeah, put him out to pasture. Hopefully I’d have 10 kids by this point, they’d be running the farm and taking care of me.

Howard Glassman:   Absolutely. Your name would be Ezekiel and…

Peter Miller: Exactly.

Howard Glassman:   You know, it’s funny, because I tried this joke a little while ago about how remarkable it is we live to the age we are. I said, for instance, I’m nearly 60 years old. No big deal nowadays, but 100 years ago, I’d have been one of the oldest people on the planet. You know, 100 years ago, if I’d have died, it would have been in the news: Today, the oldest guy, 61-year-old…anyway, let’s not.

Peter Miller: Yeah. You’re just getting started. I watched Paul McCartney when he was about 61 do a three-hour set without taking a drink of water, didn’t change the key he was singing in, and I thought, you know, he’s setting the highwater mark. As long as he’s out there touring and doing his thing, that’s like the threshold.

Howard Glassman:   Let’s begin a little bit, since we’re talking about your age, let’s begin a little bit – you said you got involved, you told me off before we started, six years ago. You were in the tech space, and I’m always fascinated, and I think it’s an interesting story to tell: do you remember that moment where you went, you know, this cannabis thing? When you felt a light being, something that would draw you to this?

Peter Miller: Yeah, absolutely. So in November of 2012, watching the general election in the US, a lot of attention was drawn to two ballot initiatives that would legalize cannabis, one of which was in the state of Colorado. They both passed, and there was going to be recreationally legal cannabis for adults in North America, and that was kind of mind-blowing. It was, like, insane.

And then a relative, a now-relative, then my girlfriend’s cousin, was telling me at Thanksgiving about how there was this program in Canada where you could grow cannabis for yourself or for a designated patient, you know, with a doctor’s prescription through, you know, the appropriate paper process. I thought that sounds crazy, like, I didn’t know about that. I went online, and in December Health Canada put out guidance describing this new thing, which then was called the MMPR, which was going to replace the old thing, which was the MMAR, and effectively created the world’s first federally legal commercial market for medical cannabis, albeit highly regulated.

And that set off, you know, the Aha, you know, this is interesting, and could I be part of this.

Howard Glassman:   And you were in a tech company?

Peter Miller: Yeah, I worked for a large tech company. We were making smallish investments in start-ups, so I was kind of in the start-up world, more as an investor. Historically, I’ve been an entrepreneur since I was hiring neighbours to shovel snow in the neighbourhood in elementary school.

Howard Glassman:   Look at you.

Peter Miller: Shooting bat mitzvah videos in middle school, and doing a bit of a media business, which is where I met my co-founder, Billy, over 10 years ago.

Howard Glassman:   Wow.

Peter Miller: When I was doing some content for his company. So I was in media, I was in tech, saw the opportunity in cannabis, and contacted Health Canada asking when these regulations would come out. I came to find out you could get an advance copy of the regulations a few weeks before they went into law. The date, I think, was June 19, 2013. And so I was furiously reading these, you know, 130 pages, although it was French and English, so it could have been half of that in terms of content.

Howard Glassman:   Yeah, who knew? Right.

Peter Miller: And naively, it all looked doable. I was like, Oh, SOPs, standard operating procedures? Sure, I’ll write those out, you know, on menu cards. A quality assurance program? I’ll find out what that is.

Howard Glassman:   Yeah. So in the early days, you know, you were looking through regulations and you were seeing this as an opportunity. Because you had been in tech and because you’d been investing in some smaller companies, did you also right away – and this, I’m assuming this was before SLANG Worldwide was developed – did you see it as a way to make huge wheelbarrows full of money?

Peter Miller: It wasn’t then what it is now, so obviously, build the Excel spreadsheet and you make your assumptions, and you say, If I can produce a gram of water, even half a gram of wat, and I can sell that gram for this much money and it cost me that much money to make…

Howard Glassman:   Like every drug dealer in the history of drugs!

Peter Miller: It wasn’t that complicated, right? You make it for this, you sell it for that.

Howard Glassman:   Seriously, guys in hoodies have made money – not everybody, I’m just saying.

Peter Miller: I mean, but one of the biggest misconceptions about growing cannabis is that it’s a great way to make money.

Howard Glassman:   Get somebody else to grow for you.

Peter Miller: It looks awesome – and ultimately, through the experience of starting one of the first licensed producers, experiencing that vertically integrated model of growing it yourself, taking it all the way to the customer, I realized that was not the best way, you know, for business-model wise. And so at SLANG, we purchase raw material, we process it into finished goods, a variety of formats, and then we wholesale it to retailers with our brands on it.

Howard Glassman:   I want to talk about that, too, when we get a little bit further down in this story, to talk about finished goods and the different ways that cannabis is not only produced, consumed, and what the future of that is. But let’s talk about the beginnings. Now, SLANG trades on the CSE: SLNG, if you’re looking it up. And I just want to go through a couple of these things. So in 2012, you and Billy Levy, the president of the company, co-found Mettrum Health Corp., and that was acquired by Canopy in 2016. So between 2012 when you were like noodling around with the regulations, all of a sudden one day Canopy calls and they buy your company?

Peter Miller: I mean, so a couple of things. Mettrum Health Corp. was founded in June of 2014.

Howard Glassman:   Oh, okay.

Peter Miller: Yeah, we had another entity, and it formed Mettrum Health Corp. with another group. But that aside, and sort of simplistically, yes, Canopy bought it. I mean, Mettrum Health was built by a great team into one of the top licensed producers, and when that first wave of kind of big consolidation started taking place, once it was a little bit de-risked from a regulatory and market perspective, by, you know, Trudeau winning, legalization, a lot more investment interest, that happened.

So it was part of that sort of phase, pre-Constellation. But it was that whole experience, those years as part of that business and that business model, that made us really excited about SLANG and visiting other markets. You know, a lot of people have backpacked through Europe and experienced the Amsterdam thing; but when you went to Colorado in 2013, 2014, and you saw the difference form factors, and you saw the evolution from, you know, glass jars with raw bud to nicely packaged confections, vapes, all those sorts of things, it was, wow, you know, this is where it’s going. This is starting to look like normal CPG. That normalization will roll out across the world, and this is where I want to be.

Howard Glassman:   Well, isn’t that interesting, because that’s one of the things that has always fascinated me about this whole industry, is that – because I’ve been in a bunch of illegal dispensaries, and you know, I go way back to when, forget buds in jars, I remember a guy brought it to be in a rolled-up newspaper, son.

Peter Miller: Back when a dime was a dime.

Howard Glassman:   Back when a dime bag was a dime! But I’ve been in some dispensaries, more modern, there’s one in Victoria I reference all the time called Farm; very, very high end, very knowledgeable staff, looks like a David’s Teas, it’s very well appointed – and what did you call it, the different form factors?

Peter Miller: Right.

Howard Glassman:   It’s just unbelievable all the different forms that – and again, these are companies that started like yours, servicing the American market that are now servicing the Canadian market with marijuana in forms that have yet to even, you know, most of us have never seen.

Peter Miller: Right. And when you first saw cannabis in a liquid, inhaled through what looked like a pen, that was a little bit mind-blowing.

Howard Glassman:   Yes it was.

Peter Miller: But it became incredibly popular, because it was more discreet, there was less –

Howard Glassman:   You could do it in movies. I don’t recommend it, I’m just saying if you have one. All you do is cover the end of it. Everyone who’s ever had a pen, or if you haven’t experimented with it, it just has a little red glow so you know it’s still engaged, because they’re rechargeable. But that little move of hiding the pen in the movie – it’s quite a thing.

One thing I would like to say, though, is, you know, and I mentioned it this week when I filled in for James and I talk a lot about on my little radio show podcast, we talk a lot about how I could never have imagined, as somebody that has been smoking marijuana in some form off and on since the 1970s, I could never have imagined this revolution of marijuana in its many forms, as you say. But where does SLANG fit into the medical efficacy market? Meaning, not rec. Are you guys still involved, or are you involved, in that?

Peter Miller: Yeah, so the medical/rec conversation is fraught with all manner of dynamics, so in some markets, the difference between medical and rec or adult use is a cash register. You buy the same product and you check out at the medical cash register or the rec cash register, and there’s a tax difference. But the product’s exactly the same.

We’re not a pharmaceutical company. You know, I’m certainly not telling AstraZeneca or Pfizer anything they don’t already know, and we’re not investing in those long-term drug trial type things.

Howard Glassman:   So you’re going to be more rec focused?

Peter Miller: Yeah. We’re a consumer packaged goods company making products for consumers that like cannabis.

Howard Glassman:   Beautiful. Okay. And I know that a few times I feel like because this is a cannabis investment program, and we should talk about the company as an investment and where that’s going, but I like this conversation with you, that you know, we get a sense of what you’re producing, and then as you just said to me before the show started, you said, you know, if you want to look up the company and they can talk about the fundamentals. But how is the company doing? Is it – are you feeling you’re in a strong position? Are you -?

Peter Miller: Yeah, we’re really excited, because our whole business model is fortunately unique in the way that we can deploy capital and generate returns. Unfortunately unique sometimes in that it’s harder for people to compare it to something. We’ve been, you know, we’ve been leaders throughout our whole lives in the industry, the management of SLANG; but our business model is such that by buying raw material, producing finished goods, and wholesaling to dispensaries, we’re less exposed to wild fluctuations on the commodity side, or at the cash register. We don’t have to build and own expensive infrastructure, we don’t have the tax inefficiencies of retail, which I think are going to be improved significantly with the Safe Act as it moves through the process.

But the business is incredibly healthy. Our focus is on sales at the cash register: how are people voting with their dollars for particular brands? That’s what tells us whether we’re doing things right or not. So we look to partners to help us achieve those goals. We’re very partner-oriented. It’s a massive industry with huge opportunity and a lot of white space; there’s no point in having your elbows out if you can find people to, you know, help achieve each other’s goals.

Howard Glassman:   I love that.

Peter Miller: So we’re doing a great partnership with Trulieve for the State of Florida, for example. Massive market, huge opportunity, but it didn’t cost us a dollar to get into that market because we leveraged partnership, and we’re working with the group that has the largest footprint in that state.

Howard Glassman:   Now, we have had some conversation here about what it is you guys do, the health of your company. Where do you want this company to go? Is it just a North American play, or do you want SLANG all around the world?

Peter Miller: Worldwide.

Howard Glassman:   Yeah, baby.

Peter Miller: I mean, it’s going there.

Howard Glassman:   Do you need a butler? I can buttle. I feel like maybe if I could just sign on with you, and people would be like, Hey, Peter, who’s the old guy? That’s Howard. He’s just – he’s old Howard.

Peter Miller: Grey hair on the team.

Howard Glassman:   We need some perspective.

Peter Miller: We need someone who’s been consuming since the 1970s.

Howard Glassman:   Right. We need a spiritual leader, a liaison, a guide.

Peter Miller: Absolutely.

Howard Glassman:   We’ll talk about it. So, Worldwide. SLANG Worldwide.

Peter Miller: Anywhere cannabis is being enjoyed legally by adults, we’ll be there. I mean, the recreational legalization trend kind of started in Colorado, which is still a huge market for us; we’re very dominant in the vape category. We’re doing well in edibles, also. You know, they’re exciting kind of shiny objects in terms of markets that are going legal, or where it just went medically legal with large populations, and in those markets it’s very expensive to enter, and it takes a long time before you start generating any income. So we look for great partners that are doing that in those markets. We’re focused on the markets where people are freely purchasing and enjoying cannabis today, and that’s also how we know whether our brands are resonating.

Howard Glassman:   Just a couple of quick questions before you go. Do you see it – 2012 it was passed medically; it took till 2013 or ’14 in Colorado?

Peter Miller: Yeah.

Howard Glassman:   Do you think it’ll be adopted universally in the States at some point, obviously, in the next some number of years?

Peter Miller: I mean, it’s hard to sort of handicap that. I don’t think anything is obvious. I think that there’s certainly a lot of momentum and a lot of, you know, a lot of great tailwinds for the space.

Howard Glassman:   Maybe more states will have medical accessibility.

Peter Miller: Yeah. The majority of Americans live in a place where you can access cannabis legally, medically or recreationally. I think the middle of the country will fill in, but it’s possible that every state goes legal on its own before there’s sort of Federal consensus.

Howard Glassman:   I know Colorado is famously legal. What about – is California? Because I lived in California in the 1980s, you know, Madonna, and it was kind of legal. Like, the joke was, as long as you weren’t literally smoking in front of a cop, you weren’t going to – you might get a ticket. It was sort of tacitly legal. Where is it now?

Peter Miller: So California was one of the first to have some sort of legal framework as far back as ’96.

Howard Glassman:   But is it legal rec-wise, as well?

Peter Miller: Yeah. So about 20 years later, they voted again on a ballot initiative, for Prop 64, which legalized cannabis and kind of taxed and regulated it like alcohol. That rolled out at the beginning of last year, and so now it’s fully legal for adults to buy cannabis at stores, get cannabis delivered to them.

Howard Glassman:   Beautiful. Of course.

Peter Miller: It’s amazing, you know. There’s, you know, delivery is hard to beat.

Howard Glassman:   Why not? It’s the best.

Peter Miller: Get your Uber Eats.

Howard Glassman:   Yeah, I was getting at, whatever the slang version of Uber Delivery. So do you have a foothold in that market?

Peter Miller: In delivery?

Howard Glassman:   No, in California.

Peter Miller: Absolutely.

Howard Glassman:   Nice.

Peter Miller: Yeah, we have, you know, a top gummy, you know, month-over-month, the rankings change, but we’re at the top; we’re always there. We just launched a vape product like the pen that someone showed me earlier.

Howard Glassman:   Whatever. Ignorant, you know I have a pen. I have a pen, live with it!

Peter Miller: Okay. We launched a product called Reserve in California a couple of weeks ago, it’s doing incredibly well; we’re really excited about ramping for 4/20. But California is going to be a great market. A lot of people there, you know, people who like cannabis, and we’re seeing explosive growth in California.

Howard Glassman:   Listen, my friend, the minute I met you, I said there’s something about this kid, and I was trying to think who you remind me of. Don’t you guys think that Peter Miller will be played by Justin Timberlake? He’ll be like the Sean Parker character in Social Network.

Peter Miller: From your lips to God’s ears.

Howard Glassman:   All right, my friend, so interesting. SLANG Worldwide, quite a story, and I’m sure we’ll be hearing more about it. The CSE, SLNG, and Peter Miller, what a pleasure.

Peter Miller: Thank you. I really appreciate it, thanks for your time.

Howard Glassman:   All right, there it is, Peter Miller, people.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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