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On January. 6, 2020 SLANG Worldwide (SLNG.C) announced that it is entering into of a licensing agreement with Standard Wellness.

SLANG is a cannabis consumer packaged goods company, focused on acquiring, developing and creating regional and national brands.

“This company has created exactly what I’ve been calling for someone to create for four years now,” stated Equity Guru’s Chris Parry, “SLANG’s customers have spent over CAD $250 million on SLANG products at dispensaries in the US since 2014.”

We have a “vast portfolio of popular brands distributed in over 2,600 stores across the United States,” states SLANG, specializing “in acquiring and developing market-proven regional brands as well as launching innovative new brands to seize global market opportunities.”

Founded in 2017, Standard Wellness is Ohio’s premier medical marijuana brand serving patients with a full line of cannabis-based natural health remedies.

Standard Wellness is a fully integrated cannabis company involved in processing and production.  Located in Gibsonburg, Ohio (pop. 2,500), it currently distributes products to every medical cannabis dispensary in the state. It also operates a dispensary system, through its sister company The Forest Sandusky LLC.

This deal gives Standard Wellness an exclusive license to produce and distribute the SLANG product suite in Ohio, beginning with its category-leading O.penVAPE, Pressies, Bakked and District Edibles brands.

SLANG will derive revenue for each branded product sold in the state, with sales expected to begin in 2020.

“We strive to create brand awareness early and establish relationships with consumers in attractive, new cannabis markets,” stated SLANG CEO Peter Miller, who is focused on “discipline around capital efficiency.”

In 2015, a group of investors including an 81-year-old ex NBA player, Oscar Robertson, sponsored an initiative to legalize recreational marijuana in Ohio.  It was unsuccessful, gaining only 35% support at the polls, while failing to get an endorsement from the influential Marijuana Policy Project.

The following year, Ohio legalized the medical use of marijuana. The state also decriminalized the possession of recreational cannabis up to 100 grams.

“Ohio’s Governor John Kasich approved the medical marijuana bill in June 2016 for 21 qualifying conditions including: AIDS/HIV, cancer, post-traumatic stress disorder, multiple sclerosis, spinal cord injury, Parkinson’s disease, Alzheimer’s and chronic pain.

“Many major cities in Ohio have relaxed their rules,” states 420 Investor Daily, “Dayton and Cincinnati eliminated all penalties on cannabis possession up to 100 grams.”

Despite this, in 2016 Ohio beat cops arrested 17,000 Ohio residents for possessing marijuana.

“With a raft of recent changes in state and local marijuana laws,” stated Fresh Water Cleveland, “many Ohio citizens are confused as to what is an arrestable offense and what isn’t.

Licensed medical cannabis sales began in Ohio in January 2019. By November, 2019 Ohio had 75,000 registered medical marijuana patients generating total sales of USD $49 million.

The total market for medical cannabis sales in Ohio is expected to exceed USD $500 million by 2022, according to estimates published by Cormark Securities in January 2019. Ohio is the seventh largest state in the U.S. with a population of 11.7 million.

On November 26, 2019 SLANG announced that it had filed its financial results for the three and nine months ended Sept. 30, 2019, while also releasing details of a $15 million raise through a non-brokered private placement.

Financial Highlights – Q3 vs. Q2 2019:

  • Revenue of $9.3 million, a 29% increase
  • Pro forma revenue of $27 million which includes the impact of previously announced acquisitions and investments, a 23% increase over Q2 2019 pro forma revenue of $22 million
  • Gross profit of $4.6 million, 41% increase
    Gross margin improved to 49% from 45%
  • Sold over 900,000 branded units, containing 64 million branded servings, in 12 states, through 2,600+ retailers

SLANG projected 2019 pro forma annualized revenue guidance of $70-$100 million with “targeted positive operating cash flow by mid-2020”.

You can hear management discuss the Q3, 2019 financials on this conference call.

“Our strategy is to partner with leading brands to bring the finest quality cannabis products to patients in Ohio,” stated Standard Wellness CEO Jared Maloof. “Our agreement with SLANG will enable us to diversify our product portfolio with recognized brands and help fuel our continued growth.”

SLANG is currently trading at .39 with a market cap of $87 million, down from its April, 2019 high of $2.80.

– Lukas Kane

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

Lukas Kane

Lukas Kane is a Vancouver-based investor and writer.Previously the CEO of a North American investment news syndicate, Mr. Kane was also the Communication Director for a consortium of resource extraction companies.In the course of his career, he has toured copper mines on the Antagfonasto desert in Chile, potash projects in Saskatchewan, cannabis labs in California and clothing factories in Shenzhen, China. A rudimentary speaker of Mandarin, Mr. Kane’s passions are his family, writing and playing football (real football - with the spherical ball).

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