SLANG Worldwide Inc.’s (CSE:SLNG) Firefly products are set to provide the Company with a vape advantage
SmallCapPower | July 2, 2019: SLANG Worldwide Inc. (CSE:SLNG) is a global consumer packaged goods (CPG) company that sells its product through more than 2,600 stores across 11 U.S. States, Canada, Puerto Rico and Jamaica. SLANG has generated over US$250M in retail revenue since January 2014. In Q1/19, the Company reported it has had ~200,000 servings of its branded products consumed every day.
Figure 1: SLANG brands
Source: (Investor Deck, 2019)
SLANG’s decision not to cultivate has helped lower its capital intensity. Instead of being another vertically-integrated cannabis company, SLANG decided to focus on its core competency: the cannabis CPG market. This allows the Company to avoid operating in an already competitive market. Additionally, SLANG Worldwide is able to profit from the large supply of cannabis.
The Company’s acquisition of Firefly Brands allows it to capitalize on the growing trends moving towards vaporizer products. The number of people who vape globally have increased from 7M in 2011 to about 35M in 2016 (Euromonitor International, 2019). This has the potential to be a lucrative product segment, as SLANG offers vaporizers in a variety of price ranges that can target a more diverse customer segment.
Figure 2: Firefly 2+
Source: (SLANG Worldwide, 2019)
How the Company Generates Revenue
SLANG focuses on generating revenue in two main ways: 1) Through the collection of licensing fees and by selling specific product components, such as packaging, hardware pieces and flavoring concentrates; 2) By selling non-plant touching products, such as its Firefly 2+ vaporizer. Typically, these products are sold through The SLANG Network, which is a mixture of licensed cannabis manufacturers, distributors and eCommerce distribution platforms.
How SLANG’s Products Get to Market
SLANG sells its products listed above to its SLANG Network partners, which consists of licensed cannabis manufacturers, distributors, and eCommerce distribution platforms. The SLANG Network partners are in charge of manufacturing, packaging and distributing the final branded products for retail customers. Currently, the Company owns, licenses and markets 11 brands that fit within flower, inhalable concentrates, and ingestible categories.
Organa Brands – Acquisition completed on January 22, 2019
Organa Brands is a U.S.-based cannabis company that has distribution in 10 states, with its products being found in more than 1,500 stores in the U.S. and Jamaica. The Company focuses on cannabis extract and vape pens.
Firefly Brands – Acquisition completed on January 22, 2019
Firefly is a vaporizer technology and hardware company. Its products include Firefly 2, a portable vaporizer that is efficient to use with its controlled dosages, which is sold in over 2,500 stores across 14 countries. With this acquisition, SLANG expects to release the next generation of Firefly devices and utilize its distribution platform to the device.
LBA Global Corporation – Entered agreement to acquire on May 14, 2019
With the acquisition, SLANG will gain LBA’s brand portfolio, Lunchbox Alchemy and its subsidiary, Hydra Distribution. This proposed transaction should increase the Company’s position in the Pacific Northwest by adding to its supply chain and distribution capabilities and, allowing its products to be available in Oregon and California.
Arbor Pacific, Inc. – Announced proposed acquisition on April 16, 2019
Arbor is a producer of branded cannabis products that has a portfolio mix that includes vaporizer, flower and CBD product categories.
Trulieve Cannabis Corp. – Entered partnership on February 29, 2019
This partnership is expected to allow the Company to bring SLANG products to Trulieve’s retail network that consists of over 20 dispensaries in Florida.
Southern Development Holdings – Entered partnership on March 6, 2019
With the partnership, SLANG is expected to offer its branded cannabis products to Puerto Rico customers, which will include tourists that have active medical cannabis licenses from the qualified states.
Agripharm Corp – Letter of Intent entered on July 11, 2018, was finalized in Q1/19
The Letter of Intent is for a 20% minority equity position in Agripharm. Agripharm owns a cultivation and processing facility with over 20,000 sq. ft. of indoor growing space. It does not distribute products directly but contracts out its products in an off-take agreement. This agreement also provides SLANG with operations in Canada.
Green House Brands – Entered binding Letter of Intent in January 2018 for a Licensing Arrangement
Green House Brands has a portfolio that includes five cannabis businesses: 1) Strain Hunters, 2) Green House Seed Co., 3) Green House Feeding, 4) Green House Coffee Shops, 5) and King of Cannabis. The licensing agreement is expected to give SLANG the rights to license select intellectual property owned by Green House.
Greenlane – Entered Partnership Agreement on May 2, 2019
The Company announced its new wellness-focused business division, SLANG Health and Wellness. This division will develop and sell a variety of plant-based CBD products that will be distributed through its partnership with Greenlane Holdings, Inc.
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