Slang Worldwide Inc. (CSE: SLNG) (OTCQB: SLGWF) will become the latest multistate cannabis brand to effectively pull up stakes from California, CEO John Moynan said in an interview with Green Market Report on Tuesday.
The pivot comes less than two years after the company made a splash about re-entering California, which it previously left in 2019. Slang’s history in California cannabis dates back to 2012, Moynan said, and he emphasized that the company will never fully wash its hands of the Golden State.
“We’ll always have our eye on it, because as a brand, you have to,” Moynan said.
Slang pulled out of both Oregon and Oklahoma last year while the company was undergoing a major restructuring. And market conditions in both California and New York are similarly troubling, Moynan said, with major uncertainty and competition from the underground market making it tough in both states to predict solid profit margins.
That’s a big reason Slang doesn’t yet have a presence in New York, either, he said, but is focusing on states where it has the best odds of turning a profit.
Moynan said the plan in California is to sell through remaining inventory for its portfolio of brands such as District Edibles, and then wait for the market conditions to improve.
“Right now, we’re not actively supporting California as a market,” Moynan said. “We’re basically selling through (existing inventory)… The plan is to wait and see if California corrects itself, and if it makes sense to reintroduce. It’s not a sustainable market.”
Slang, which has a presence in 15 states and U.S. territories, is only the latest of several national brands to pull out of California. In January, SFGate reported that Jerry Garcia’s family cannabis brand, Garcia Hand Picked, was pulling out of California, and last year, Green Market Report confirmed that Colorado-based Wana Brands, Florida-based Trulieve, and Massachusetts-based Curaleaf all left too.
“If you’re competing on price with someone who’s not paying for testing costs, and doesn’t pay taxes, and all those things, that trickles all the way up through the value chain, and nobody’s able to make money because at a point of retail, you’re competing with somebody who has fundamentally different unit economics,” Moynan said of both New York and California.
“Until that changes – which, I don’t know how that changes in New York – and you can actually demand a price that supports all of those additional costs that come with producing licensed product, it doesn’t work for anybody,” he added.
Moynan also didn’t rule out yet another re-entry to California, but said there isn’t a single trigger that will make the decision for Slang.
“California has a multi-dimensional problem on its hands,” Moynan said, and ticked off “tax issues, enforcement issues … over-saturation issues,” along with a lack of legal retailers around the state.
But for now, Moynan – who was only promoted to CEO in October – said he’s happy that his focus has pivoted from “‘How do we save the business?’ and now it’s on to ‘How do we grow the business?’”
Part of the answer, Moynan clearly believes, is to not put down any “big bets” on West Coast cannabis.