SLANG Worldwide is bringing its suite of cannabis brands to Missouri and Virginia, two newly legalized medical cannabis markets that offer a lot of promise to the business. In the same stroke, SLANG is expanding its presence in Michigan’s retail sector.
This all came about through SLANG’s new strategic partnership with Merida Capital Holdings, a private equity firm that touts a deep portfolio—both plant-touching and ancillary. For SLANG, the move allows the business to place its proprietary brands (O.pen, Bakked, District, Pressies, Lunchbox Alchemy and Firefly) in front of new patient and customer bases.
As CEO Chris Driessen said, "Integrating our brands in emerging markets through strategic partnership is core to our growth strategy.” Here, we caught up with Driessen to learn more about the partnership and about the inherent attraction of newly legal markets in the U.S.
Eric Sandy: In terms of Missouri and Virginia, how do you view the opportunities in these two emerging markets
Chris Driessen: As emerging markets, these are markets where you work with a strategic partner—in this case, Merida and their affiliates—to bring products to market. It's similar to what we've done in Florida with Trulieve or Michigan with Gage. This fits that model perfectly. What's really interesting about both of these states, from my point of view—one, Missouri's regulations, the way they're rolling out the program, it’s a pretty wide open market. It’s a state with a good population. Certainly on their southern border with Oklahoma, there's massive access for patients there. So, as far as the model itself, the way they've drawn up the program bodes very well for a business like ours. And then you turn to Virginia, which is a little different—more limited, a little more restricted, but with all the recent regulation with what the governor is trying to do there, it could come on really quick. Obviously, we want to skate to where the puck is going, not to where it's at. So, two separate markets, but we're excited about both for two different reasons.
ES: As you step into a new market like these two states, what are some of the keys to bringing your brand to a marketplace with patients or even consumers who may not yet be familiar with your brand?
CD: First and foremost, you always want to align yourself someone that has a similar vision and a similar culture, that has the infrastructure, the leadership, the capital to be able to execute on the plan. And certainly we have that with Merida. Whenever we enter a new market—we're big data guys, so we always want to know all of the analytical data that we can have around the population, the consumption habits, the preferences and products. That's a little tricky in some of these newer markets, because the data just doesn't exist. Fortunately for SLANG, these two markets made No. 15 and 16 for us. That’s 14 states, Canada and Puerto Rico. So, we've got a really large sample size of what people like, whether that's edibles, concentrates, vape, flower, pills, we really kind of run the gamut with our product portfolio.
"For the past 11 years, we've been preaching brands and CPG, really, since we've been in the game. Now, all of a sudden, that's become very in vogue—and rightfully so."
- Chris Driessen, CEO, SLANG Worldwide
We’re able to take a much larger sample size data than most folks and we’re able to say, “These are likely going to be the things that consumers in those two emerging markets are going to want most.” And then of course you have to pair that with the infrastructure in both states, with the partners you're working with, what does [the state] allow for—you know, different equipment has different lead times. There are different regulations sometimes—maybe it's a potency restriction, or maybe they don't allow flower, all of those kinds of things. You put all of that data into what we call a complexity matrix, and it spits out lead times and it prioritizes those by what is going to be the best bang for our buck. Now, certainly in time, we want to bring all of our products in all six of our brands—almost 100 different products—to market, but of course you can't do everything at once.
We plugged all the data into the complexity matrix and worked with our product team. We work in-market, of course, with the partners there. And we both devise a game plan: Here's what we're going to do first, second, third. We continue to put those things into the market and then devise a go-to-market strategy of how we're going to move them through the market with our different sales and marketing tactics. It’s a long, involved process. If you've been following us, we'll announce a market and then you've got sometimes months and months before the product's actually available. It really is customized to the specific market and the specific partner, but we let the data be our guide.
ES: I wanted to ask about brand affinity. How has that evolved in the cannabis space? Is a market like Colorado all that different from Missouri in this matter?
CD: You know, strangely enough, you don't see huge variations there. There's certainly some nuances, and we've cut our teeth in Colorado. We've been doing it in Colorado since 2010. We learned a few things along the way over that 11-year journey, but largely most of the new markets that open up generally follow the same series of events. The consumers go on the same journey when a medical market opens. Generally, it's, “Hey, what's the strongest thing for the cheapest amount of money?”
Certainly, we have value products that are part of our O.pen line and our District line that fit that bill. But then you start to see the consumer mature and understand things like terpenes or things like live resin—a more educated consumer emerges. The more they've been around the plant, their tastes change over time. The beauty of what we do with SLANG is, we've got six brands, almost 100 products, and not only do those cover all the best categories, we also are able to segment our product offering within a category. What that means is we've got value products, we've got premium products and everything in between. For me, brand affinity is really driven by a couple of things.
One, did I enjoy the product? Is it high-quality or is it at a fair price? And did I have a good experience, a good “branded moment,” as we call them, when I consumed the product? And if you do, then generally those consumers are going to want to repeat that experience. The holy grail for us in infused products is repeatable experience. You get that from proven processes, from very tight SOPs, from working very closely with the folks who are making these products in their states to ensure that the quality is there to ensure that that branded moment is going to be similar, whether you're in Portland, Maine, or Portland, Ore., and, by the way, we have products in both.
ES: When you were looking for a strategic partnership, what were some of the qualities that you needed to be on the table to work with Merida?
CD: Much like we have our complexity matrix for our products, we also have a priority matrix—or, “Where are the places you want to be? Where's the next big place that cannabis is going to show up in a big way?” We were already in 14 points before we were talking to Merida. So, our list is maybe a little thinner than some, just because we are so widely distributed, but anytime we look for a new strategic partnership, we're looking at a few things.
One: What's the infrastructure and the ability to execute on this plan that we're going to devise? Two: What's the fit? And when I say “fit,” this is all the things around culture, vision. As you know, it's always easier to work with people you like. It's always easier to work with people that you have something in common with. When you find those two things, that's generally a really good sign that we're going to be able to do some really good things. We certainly have that with Merida. There's no doubt about that.
As you know, there's a ton of capital that's available right now. We weren’t really looking for capital. So that, wasn't a pretty interesting thing to us, just because it's pretty readily available in a lot of places. The key point of this deal was, "Hey, going into these couple other markets, getting this retail placement with [Merida’s] dispensaries in 3Fifteen, which is one of the largest retail footprints in Michigan, those were the really attractive pieces.” As we got to know each other a little better, they're like, “Hey, wow, we want in on this too.” That's how you saw this deal come full circle. It included Merida Capital's strategic markets and retail placement. It was more than just money. When you have that fit and the ability on top of that, it just made all the sense in the world.
ES: As 2021 gets under way, what sort of trends are you watching in the market?
CD: We're getting a lot of inbound inquiry from MSOs. And I don't think a lot of people look at Merida as an MSO, but they certainly are. Look at how many fingers they have in how many pies in how many states. It’s really interesting that now that our story and what we do—and our ability to work with these MSOs and really drive performance for them—now, people are really finding value. We’ve known that all along. For the past 11 years, we've been preaching brands and CPG, really, since we've been in the game. Now, all of a sudden, that's become very in vogue—and rightfully so. Consumers want choice, consumers want preference, and they want brands.