Canopy-Backed Slang Jumps in Debut With Pot Brands in Focus
(Bloomberg) -- Two cannabis entrepreneurs who sold their first pot company to Canopy Growth Corp. for C$430 million ($324 million) hit pay dirt again after their cannabis-brand company surged in its trading debut.
Slang Worldwide Inc., co-founded by Peter Miller and Billy Levy, began trading Tuesday on the Canadian Securities Exchange through a direct listing. The stock jumped 19 percent to C$1.79 at 10:16 a.m. after listing at C$1.50, giving the company a market value of about C$645 million. That’s more valuable than Mettrum Health Corp. when Miller and Levy sold it in early 2017 to Canopy, the world’s largest cannabis company.
Unlike Mettrum, Slang won’t be growing pot and it has no plans to open its own retail stores. Instead, it’s focused on brands and distribution, particularly in the U.S. where it’s already in 10 states and plans to be in 10 more before the end of the year. As legalization of recreational pot spreads around the world, cannabis is shifting from an agricultural product to a consumer-packaged good, Miller said.
“The best brands tied to the best distribution networks will ultimately be where the most value is created,” he said in a phone interview.
Slang owns several cannabis brands, including O.penVape, the second-best selling U.S. legal cannabis product with $187 million of sales from 2014 through November 2018, according to data from cannabis research firm BDS Analytics that was shared by Slang. The company, which sells its products in 2,600 stores, reported C$21 million of consolidated revenue in the nine months ended Sept. 30 and a net loss of about C$24 million.
Slang raised C$66 million in a September financing and intends to use the public markets to access the capital it will need to expand into other countries in Europe and Latin America. It will trade under the ticker SLNG.
Miller, a Canadian, and Levy, who’s American, knew little about pot when they founded Mettrum in 2013 to grow medical cannabis in Canada, so they turned to U.S. markets like Colorado where the drug was already legal to learn about best practices.
“We went and developed a lot of expertise and relationships that are now part of Slang, and I think having that cross-border view has been super helpful to put us in the position we’re in today,” Levy said.
Slang has operations in Canada through Agripharm Corp., a licensed cannabis producer that’s 20 percent owned by Slang and 40 percent owned by Spectrum Cannabis Canada Inc., a subsidiary of Canopy.
Canopy has a warrant that allows it to acquire 32 million shares in Slang, or about 15 percent of the company, if the U.S. legalizes cannabis at the federal level. The warrant is tied to a collaboration agreement that would see Canopy and Slang partner on distribution, marketing and research.
“Ultimately we care about one thing and pretty much one thing only, and that’s getting the most servings of cannabis into the world with our brands on them,” Miller said.
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