Exclusive Interview with SLANG Worldwide CEO and President Chris Driessen
Chris Driessen recently stepped up as the new President and CEO of cannabis CPG company SLANG Worldwide (CSE: SLNG) (OTC: SLGWF), with Peter Miller becoming Chairman. We had interviewed Miller at the beginning of 2019, ahead of the company listing on the CSE. Driessen spoke with New Cannabis Ventures about his new roles, SLANG’s important markets and plans to achieve profitability. The audio of the entire conversation is available at the end of this written summary.
Changing of the Guard at SLANG
Before entering the cannabis space, Driessen worked with a number of Fortune 500 companies. He came to SLANG when it acquired Organa Brands in 2019. His experience with the SLANG business model, track record of execution and his ability to drive profit make his new leadership roles a natural fit. The company started the planned leadership transition process back in the third quarter of 2019, according to Driessen.
Driessen’s main goal at the helm of the company will be to reach profitability on a consolidated basis, something that he has done many times in his career. SLANG will achieve that goal by expanding its brand presence across multiple markets while preserving capital.
SLANG co-founders Peter Miller and Billy Levy remain involved in the company’s day-to-day, according to Driessen. He also highlighted COO John Moynan and CFO Mikel Rutherford as important members of the leadership core.
The SLANG Network
SLANG generates revenue in three distinct ways. First, the company makes money through its core market operations. Second, it makes money through its strategic partnership model by licensing brands and providing strategic value-added services. Finally, it has an e-commerce channel .
Colorado and Oregon are the company’s core markets. Here, SLANG and its partner companies are licensing and providing support to bring brands to market and manufacturing, distributing and wholesaling.
The company is in an additional 10 states, Canada, Puerto Rico and Jamaica, which are considered emerging markets. SLANG enters its emerging markets with proven operators. For example, SLANG is in the Florida market via a partnership with Trulieve. It has entered into strategic partnerships in Michigan with Gage Cannabis, in Ohio with Standard Wellness and in Oklahoma with Elite Cultivation. Elite Cultivation has a strong background in manufacturing and distribution, making it an ideal partner for SLANG in the exciting Oklahoma market.
SLANG has also entered into a partnership with Cookies, which allows it to expand its product offerings in the flower category in Colorado and Oregon.
The SLANG network spans across almost 3,000 non-dispensary brick and mortar stores and more than 1,000 dispensaries. It sells non-THC products through its e-commerce platform, which builds brand loyalty with consumers and creates a foundation for offering those same consumers THC products once that is allowed.
House of Brands Strategy
SLANG owns brands, acquires brands and works with brands through its strategic partnerships, like the one it has with Cookies. These three different buckets help to build the company’s diversified house of brands strategy.
The company’s house of brands spans a wide variety of categories, including vape, edibles, concentrates, pills and flower. Within each of those categories, it also offers different segments ranging from value to premium products. This diversification has helped the company weather challenges like the vaping crisis and the pandemic.
SLANG’s O.PenVAPE is a top-selling vape brand, and late last year, the company was disproportionately affected by the vaping crisis, according to Driessen. But, the company’s portfolio is diversified through products like District Edibles and more recently the Cookies brand.
Likewise, the pandemic has presented a challenge. SLANG’s products are heavily distributed in the tourist areas of Colorado. But, the company’s broad scope of offerings has proven to be critical. In a time when people’s buying habits are changing due to cash concerns, SLANG is there to offer value products.
Although the company has not been immune to the challenges of the pandemic, it is still growing with its recent market expansion into Michigan and Oklahoma. Driessen is confident in the company’s versatility and ability to weather these kinds of challenges.
SLANG is in the process of acquiring Lunchbox Alchemy, a top edibles brand in Oregon. Going forward, it will look at potential M&A on a case-by-case basis. Driessen is taking a balanced approach to growth, considering acquisitions and organic growth depending on the circumstances.
A Capital-Light Model
SLANG has a strong, clean balance sheet with the cash available to execute its strategic plan, according to Driessen. The company had its first cash-flow positive month in June, and it is steadily moving toward its goal of profitability on a consolidated business.
The company has been mindful of its cash, which means it hasn’t had to take financing options out of necessity, according to Driessen. The company intends to continue growth with a capital-light model. Generating positive cash flow is the ideal financing vehicle, but Driessen will keep the door open to other conversations. Once SLANG does become profitable, more avenues for financing, with more favorable terms, will likely become available.
Outlook on the Future
The company generated approximately 60 percent gross profit, according to its Q1 financials. Determining a gross margin target can be difficult because the company does so many different things, according to Driessen. The profit margin profile is different for its core markets, emerging markets and e-commerce operations. For example, top-line revenue is higher in its core markets, but the profit margin is a bit lower because of the additional operating expenses. When considered together, the company is aiming for 20 percent on the bottom line, according to Driessen.
SLANG’s core markets represent major growth drivers for the company. It has products in nearly 60 percent of stores in Oregon and in close to 300 stores in Colorado. Plus, it has product categories closing in on the top one to three positions, according to Driessen. As the company grows in its emerging markets, Driessen expects similar success.
The pandemic remains an uncertain factor for the future, but the company is pushing forward through the unknown. SLANG is focused on integrating acquisitions and consolidating its supply chain while looking at opportunities like the Canadian market. SLANG recently received a wholesale license through its minority interest in LP Agripharm in Creemore, Ontario. The company is closing in on profitability, and it will continue to execute on its capital-light model and grow its house of brands.
To learn more, visit the SLANG Worldwide website. Listen to the entire interview:
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