Transcript:

Seth Adler: Peter Miller joins us. Welcome to Cannabis Economy. I'm your host Seth Adler. Download episodes on Canneconomy.com, That's two n's and the word economy, or wherever you get your podcasts. There's a ton of direct insight on Canneconomy.com these days from business, policy, and scientists in the space.

Seth Adler: First, a word from Bedrocan, and then Peter Miller.

Seth Adler: Bedrocan is a patient-driven, global pharmaceutical-minded cannabis company. Their entire end to end process is GMP certified through Dutch and ultimately European authorities. Bedrocan is the market leader in Europe for medical cannabis and has been the sole supplier to the Dutch government for 16 years. Through the Dutch government, Bedrocan provides product to 15 countries currently. As a science-based company, Bedrocan invests in clinical research. Leiden University conducted a double blind placebo controlled clinical trial on fibromyalgia with Bedrocan products, which yielded promising results. They're now working on a followup to that study.

Seth Adler: Bedrocan is also working on the extent to which cannabis can reduce our reliability on opioids. Bedrocan believes that clinical research is key for the future of the company, standardized product, the industry, and the patient. Visit Bedrocan.com for more information.

Seth Adler: Peter Miller. Here we are. It's a nice day.

Peter Miller: It's a beautiful day. It beats yesterday.

Seth Adler: Yeah. Exactly. SLANG brands.

Peter Miller: Yup.

Seth Adler: You've done this before. You're going to do it again. Right? That's what Christine Troy tells me.

Peter Miller: Yeah. I mean, do it again, done it before. It's tricky. My initial foray into legal cannabis was a very different one, a very different business model, a very different time.

Seth Adler: Talk about it. What'd you do?

Peter Miller: I mean, almost six and a half years ago, we saw Colorado legalize adult use. That was a huge cultural event. It was in the news, reached me in Canada. I thought, "Wow. That's fascinating." Saw that the laws in Canada were about to change. Contacted Health Canada, asked them for further information. Got an advance copy, like anybody could, of the regs about this time in 2013, and for the next couple months before it became law in June, I just looked through it. Yeah, I could do that, I could do that. Just naively like any entrepreneur SOPs, quality assurance, that all sounds doable.

Seth Adler: Sure.

Peter Miller: But went for it. And I think my competitive advantage back then with Health Canada was that I didn't know anything, didn't know anybody, and I think they looked for people on a personnel, security level were going to be clean. So fast forward a couple years-

Seth Adler: Well, don't fast forward.

Peter Miller: Okay. Don't fast forward. I forget how much time we have. I get accused of being long winded, especially with talking about myself.

Seth Adler: I thought you were going to go to the new place, but you were still-

Peter Miller: Oh yeah. Because this is a six and change year journey. So I'm trying to-

Seth Adler: Okay, so maybe fast forward.

Peter Miller: Three parts.

Seth Adler: Fair. That's fair.

Peter Miller: Fast forwarding a couple years, we got licensed. Met a group of guys that also got licensed early on, and we formed a company called Mettrum health Corp. That company grew to become a top three licensed producer in Canada under the old model. Vertically integrated, limited license.

Seth Adler: Now this is, what was it? MMPR?

Peter Miller: This was the MMPR. It replaced the MMAR, which was kind of this home grow thing, kind of like a Prop 215.

Seth Adler: So that's my question. You were MMPR, number three, or MMAF number three?

Peter Miller: No, no. I wasn't MMAR at all, and I think that's what Health Canada liked.

Seth Adler: Gotcha. Because you didn't know anybody.

Peter Miller: I was a tech kid. Came in-

Seth Adler: MMPR. I gotcha.

Peter Miller: I didn't even have the relationships to put it in the street.

Seth Adler: How did you get to number three? Because if like you just said, didn't know anybody, you didn't start with a running start. You're standing still at the beginning. How'd you become number three?

Peter Miller: So Health Canada had a guy who's job it was to encourage people to apply to become licensed producers, which seems absurd because there were thousands of people that wound up applying. But I talked to him early. I told him-

Seth Adler: You said you were early on with this.

Peter Miller: Yeah, and I reached him. And I told him my family background a little bit in agriculture in this community.

Seth Adler: So that's the answers, you have agriculture roots.

Peter Miller: Yeah.

Seth Adler: You had the green thumb, Peter.

Peter Miller: My family certainly does. I grew up in the city. My dad was the first person to leave the farm since the 1850s.

Seth Adler: Got it. But you have those roots so to speak.

Peter Miller: Exactly, and I think they liked that.

Seth Adler: Pun intended.

Peter Miller: Indeed. And I think there was a huge amount of luck involved as well. And I think there has to be in any success. But it was a combination of right time, right place, strong application, and it was a huge turning point.

Seth Adler: All right. So fast forward again, now you're number three.

Peter Miller: Number ... So we had a couple licenses. We were number three, number 16, ultimately we got number 20-odd. But Mettrum Health Corp was able to raise capital in the summer of 2014. Fidelity led our go public round, which was unique because that was institutional money coming into the cannabis space before it was what it is today.

Seth Adler: Got it. I think that I thought you were the third best seller.

Peter Miller: Oh. I hear what you're saying. We became that too.

Seth Adler: Oh, you did?

Peter Miller: Yes.

Seth Adler: Okay. Good.

Peter Miller: It depended on any ... So there are only a couple public companies at the time. Tweed wasn't yet Canopy, us, Aphria went public in that time period, Bedrocan went public in that time period. Just being there was success back then.

Seth Adler: Got it.

Peter Miller: So fast forward, Trudeau won. Cannabis legalization is in the news. All of a sudden people get interested in this sector in a way that they certainly weren't before from an investment standpoint.

Seth Adler: Indeed.

Peter Miller: And this first kind of wave of consolidation started taking place in Canada. Canopy Growth bought Mettrum Health Corp, and around-

Seth Adler: Were you a suitor or a suitee? Were you looking or were they looking?

Peter Miller: I think the bankers were looking.

Seth Adler: Got it.

Peter Miller: I think the entrepreneurs.

Seth Adler: Shotgun marriage of sorts?

Peter Miller: No, I wouldn't say that. But I do think there was a sense that together this thing could grow more quickly from both a capital market standpoint operationally. This was pre-Constellation, and I think that what Constellation was looking for in some ways was scale. How do I place a bet on the biggest sort of.

Seth Adler: So why not just kind of tuck these guys under.

Peter Miller: Sure.

Seth Adler: There's an exit. Was that the aim, or was it bittersweet?

Peter Miller: I mean, I was kind of, again, a little bit naïve of, "Hey, we're going to build this thing, and maybe in 20 years it'll be ..." As an entrepreneur, I was more operationally oriented. I wasn't thinking this will be a great exit. I certainly didn't think the speed at which it all took place was going to be what it was. I mean, this whole arc kind of takes place from late 2012, early 2013 to late 2016.

Seth Adler: Yeah.

Peter Miller: That's blinding fast. I saw something yesterday that reminded that Canopy Growth has been around for five years, and went from an 89 cent to $60-odd stock, creating $20 billion in market cap or something insane like that.

Seth Adler: So political matters in cannabis, and you brought up Trudeau winning. And that did really press the fast forward button as I remember it, and I'm interested in hearing from the inside, what you were thinking when he won because that was not expected. That was a completely unexpected win.

Peter Miller: Totally. I remember my wife and I walking to the polling station up the street in like a high school basement and voting for him, and thinking, "Okay. Well, we'll see what happens."

Seth Adler: Right. I can feel good about myself because I voted for him, but who knows. Probably nothing happens.

Peter Miller: Exactly. There were a lot of folks in the finance community thinking he's a bit of a lightweight.

Seth Adler: But he ran on cannabis.

Peter Miller: He ran on cannabis.

Seth Adler: And then he delivered on it.

Peter Miller: And he delivered on it. Right until I think the moment of legalization, there were a lot of people saying, "Oh, this can't happen. Something will stop this." And there was a cannabis scandal a couple years earlier in Canada where it was a news event that he admitted to having consumed cannabis while an elected official. Yeah, he said at a party here or there, and that was like wow, which speaks to the change-

Seth Adler: Yeah, scandals are different these days.

Peter Miller: Yeah. I mean-

Seth Adler: Well, specifically in cannabis. All right. So now here we are, right? You exit Mettrum. Congratulations. It's what the goal is in Silicon Valley to speak parlance of our times, and in this new world that we're describing where we do have public companies that have name your billions dollar valuations. We're in a completely different place we were when you were picking around the-

Peter Miller: I couldn't believe it that Mettrum Health was worth $70 billion. I was just like, "This doesn't make sense."

Seth Adler: It doesn't, but that's a different conversation.

Peter Miller: Right.

Seth Adler: So in this new world, you have this new entity.

Peter Miller: Right. So after the Canopy acquisition, I was looking at the landscape thinking about where this was all going, where it could go, and I watched visiting the U.S. quite a lot, trying to learn how this all looks because I didn't know anything. I had to learn. I had to find expertise. The expertise I was finding was in the U.S.

Seth Adler: While still building-

Peter Miller: Yeah, early. We brought the first couple people to Canada under a NAFTA management consulting visa which specifically said
we're here to teach Canadians how to grow cannabis, which was hilarious.

Seth Adler: Yeah.

Peter Miller: But I watched kind of the dispensary experience go from a mason jar with cannabis with kind of a label maker that said Super Lemon Haze, to more sophisticated finished good. And this was not a thing in Canada right, and I thought, "This is where it's going. This is the future. This is going to be a consumer package goods category. I want to be on that side of it." I had made some relationships and friendships in those journeys through the U.S., including the Green House Seed Co and Strain Hunters folks from Europe who we both met in America looking at the same thing. I met the folks behind the O.pen back in those days as well and established a friendship, and we watched kind of each other execute. And it was these kind of relationships that formed SLANG going back a couple years.

Seth Adler: And how did they form SLANG because I know the O.pen Vape guys. So how does it all work?

Peter Miller: I think we saw in each other that had done what we said we would do, which is surprisingly rare. A lot of people with ideas, not as many people that see those through. And they were exploring the Canadian capital markets as almost every American cannabis company has at some point over the past few years. Toronto has become a bit of a-

Seth Adler: A bit of a, without question, a hub.

Peter Miller: Yeah, everybody's come through to sort of see what they could get in a situation where if they chose to go public. And so they came up, and we just introduced them to a lot of people. We weren't thinking, "Hey, what if we formed a new entity that went public together?" We were building SLANG on a vision of bringing brands to market, not owning all the infrastructure. We'd actually discussed the formation of a JV with the O.pen guys. But we were still very like, "Hey, I'll introduce you to whoever. These different bankers." But ultimately we realized, "Hey, we should probably just do something together," because we're friends. There's a mutual respect. There's a vision for the long term that goes beyond, "Hey, let's take the O.pen public," or, "Hey, let's ..."

Seth Adler: Now I know that there are a number of other brands as well, but essentially now this is a public company that, what? Can infuse tremendous amount of institutional capital back into those brands so that they can operate better?

Peter Miller: Yeah. Those brands explore new brands, find different form factors that we're not participating in today. There's the O.pen on the edible side. There's District Edibles, Baked on the concentrate side, Magic Buzz a beverage. The Green House Seed Co. strains we're bringing to North America under license. Strain Hunters brands and Firefly, which is really exciting. Initially a premier hardware device and now entering oil through a few exciting products that we're going to be announcing soon.

Seth Adler: So you're the grandson of a farmer.

Peter Miller: Yeah, great, great, great grandson. Kind of potato family.

Seth Adler: So what happened here? I mean, how do you know to do what you're doing? You are not old.

Peter Miller: No, and in fact, I wasn't really coming to it as a farmer.

Seth Adler: Of course not. No, but you've got this entrepreneurial spirit.

Peter Miller: For sure.

Peter Miller: I've been an entrepreneur my whole life. I think my first business was convincing other neighborhood kids to form a snow shoveling syndicate in the neighborhood.

Seth Adler: I was going to bet on snow shoveling.

Peter Miller: I actually had a neighbor whose family was on a two year exchange program from Finland. The father was a doctor. In grade six, he was like six feet tall, and I was like 4'3", and I was just like, "We're stronger together," because he was undercutting me. And he could shovel more snow more quickly. So my $10 driveways quickly turned into $5 driveways, and he was waking up two hours before me. So we did some neighborhood price fixing, and we collaborated. That was an interesting lesson. A few years after that, I started turning my like skate and snowboard video making hobby into shoot bar mitzvah videos for my friends' siblings because the parents would see what we could do with video.

Seth Adler: Sure, and that's where the money is.

Peter Miller: Of course. I mean, at one point, I was clipping like $1400 a weekend, and I was like in the eighth grade. And I thought, "Oh my god." I mean, I'm not that old, but still inflation adjusted, that's a lot more than it is today.

Seth Adler: That's ridiculous amount of money. Absolutely.

Peter Miller: Yeah. That opened my eyes. I'm just like, "Oh my god. Media maybe that's a great business." I went to film school, much to the chagrin of my mom, who I think wanted me to be a dentist. But I didn't have good enough marks in biology. Then it was an engineer, like my father, but I didn't have strong enough marks in physics. Then it was go to business school, but I got into a good art school. So I did that. Dropped out after a semester and a half because I got an opportunity to work for the Rolling Stones on a tour documentary.

Seth Adler: Really?

Peter Miller: Yeah. Which was exciting. It was through a relationship. I was probably the 30th person that was called, but the first person to drop everything to go work on this project.

Seth Adler: Yes. As you do. I will drop out of school, and go work for the Rolling Stones.

Peter Miller: Exactly. I didn't even drop out of school officially. I didn't tell my parents that's what I done, and I didn't even tell the school. I just stopped going because I had ... And I tried to make it work, but after a year-

Seth Adler: You ghosted.

Peter Miller: I ghosted art school.

Seth Adler: There you go. It's a new thing that people do.

Peter Miller: Yeah, exactly. And after the Rolling Stones documentary experience, I got a job working for Beyonce Knowles doing video work again.

Seth Adler: I don't think we need to mention her last name. I think everybody knows.

Peter Miller: Right. Right.

Seth Adler: Thank you for clarifying though.

Peter Miller: Not the other Beyonce. Beyonce Smith.

Seth Adler: Those are pretty big gigs. Obviously-

Peter Miller: They were great gigs.

Seth Adler: -you say luck plays into this, right?

Peter Miller: It has to. You have to be lucky. You have to be prepared. You have to work hard, and it was extremely hard work. I mean, I was obviously the lowest man on the totem pole in that organization, but it was great exposure. I started doing more commercial video content for clients, which is how I met my co-founder in SLANG, Billy Levy, who had moved to Canada, this is over 10 years ago to start a tech business. And that opened my eyes to sort of the tech startup world and collaborating with him on different things with that business, which ultimately received an investment from Richard Branson, which opened further doors, how I met Christine. It became a lot more exciting to me. The sort of entrepreneurial business side of it. Media was going through some ups and downs, just what technology-

Seth Adler: As it continues to do.

Peter Miller: Exactly. You could make $20,000 editing an episode of MTV making a video when I started, and then they didn't make music videos just a few years later.

Seth Adler: Exactly.

Peter Miller: So I was thinking, "Oh, man. What do I do here?" I ultimately went to business school, and as I finished that, I was working for a large software company making small investments in tech companies. And then this is when the cannabis laws changed in Colorado, and I started thinking, "Man, this could be the perfect intersection of everything I've done so far."

Seth Adler: Yeah.

Peter Miller: And here we are.

Seth Adler: Couple different things. Folks will say to me, will ask, "I would like to get into the cannabis industry now. Maybe I should invest or maybe I should just build a cannabis brand."

Peter Miller: Yeah. I mean, there's a lot to unpack there because those are extremely different paths, right?

Seth Adler: So forget about invest.

Peter Miller: Investing in cannabis is dangerous.

Seth Adler: Yeah. So forget about that because ... Well, talk to somebody else about that. Explain why that statement of, "I want to build a cannabis brand," is in essence a ludicrous proposition.

Peter Miller: Well, I don't think it's ludicrous. I think a lot of people don't necessarily know what that means. It doesn't mean-

Seth Adler: In other words, this is not day one of you starting Mettrum when you could build a brand. Now you need how much money to actually conceive of something that is going to-

Peter Miller: I think yes and no.

Seth Adler: Oh, please. Tell me why.

Peter Miller: I don't think it's obvious that everybody who's in it now are going to be the dominate players in the future.

Seth Adler: Totally agree.

Peter Miller: I think there's some of the biggest cannabis businesses will see haven't even been started yet. I think that brands are more than just agency created visuals tied to something generic that you can force feed the public.

Seth Adler: This is what my point was.

Peter Miller: Yup. I think that people will emerge with an authentic story product, things that will go into the success of their brand, and I think that could happen year 50 of legalization.

Seth Adler: You're essentially spousing what I'm hoping to get from you, which is you actually need a product that matters.

Peter Miller: Exactly.

Seth Adler: That is relevant to a consumer, and then you need to build a story around that, as opposed to just saying, "Well, here's an industry that needs brands."

Peter Miller: Right, and brands aren't ... I mean, depending how far you want to go back to the cowboy roundup days of rounding up cattle and discerning whose is whose based on the brand on it.

Seth Adler: Right.

Peter Miller: That was the original brand to now. But you couldn't have had a brand back then without the cattle. You could be like, "Oh, check out this really cool hot poky brand." They're like, "Okay. Where are the cattle behind it?" You know. Nowadays it's like, "Look at this $1 million brand I've created with this agency." They're like, "Cool. What are you putting it on, and how is that interesting? How is that different?" And that's why in our portfolio, we have a mostly brands that have been around for a number of years. You can't hack trust. You can hack growth through just accumulating assets and jamming them together. But I think I'm stealing this from a Reid Hoffman podcast about trust, and the equation is time plus consistency equaling trust. And you can sort of create consistency by acquiring a supply chain or co-packing with someone who can make something within a standard deviation of the goal every time. But you can't hack time. You have to be in market. You have to be delivering value consistently to create that trust.

Peter Miller: So that's where brands are more than just a logo. You have to have an authentic story, product, and a lot of people say there aren't brands yet. The industry doesn't have brands. I find that a bit disingenuous and typically it's said by people who don't have brands or they have a lot of infrastructure, and they're whole pitch is, "First, we have the infrastructure. Then we have the brands, and our brands will win because we'll have the most infrastructure. And we'll be able to elbow out the other folks." Which just isn't how this works.

Seth Adler: There we go, and I love the you can have a hot poky thing.

Peter Miller: Yeah.

Seth Adler: Where are you going to put it? You need the cattle.

Peter Miller: You need the cattle.

Seth Adler: I love that. All right. Just shifting gears to what you talked about with the kind of intersection of media and technology with you and your co-founder.

Peter Miller: Mm-hmm (affirmative).

Seth Adler: I'd like to kind of step away from cannabis for a second and just get your opinion on what is Facebook? Is that a media company, or is that a tech company? Is that a platform? Is that a ... What is it, and so then we can kind of figure out how we can kind of manage it is why I'm asking you that.

Peter Miller: Right. So you said a few things, and I think that the platform question jumps out because there are people in cannabis, not to tie it right back to cannabis, who throw the word platform around, and they're refer to, "My platform can do this." It's like it's not a platform. It's a field that you're growing plants. It's a facility you're manufacturing in. Facebook's a platform and Microsoft is a platform because the people that use it are able to create other things on top of it that allow Microsoft to make billions of dollars from its partner network using the platform, taking licensing fees, etc. And Facebook's a platform because it's a place where people with vastly different agendas, goals, purposes, reasons for being there can have conversations and create value beyond just posting photos or what have you.

Seth Adler: So that's the platform answer.

Peter Miller: That's the platform answer, and I think it's just an entirely different thing.

Seth Adler: Is it a tech company or a media company?

Peter Miller: I think it's evolved a little bit. I mean, I think it's a tech company simply.

Seth Adler: Okay. Simply. Is the problem that we don't have a definition for what this is? That this is a completely new thing for society.

Peter Miller: Problem, opportunity.

Seth Adler: Sure. Wonderful, great. Use your words. That's fine. Agreed. But I think what we continue to try to do as a society is fit things into boxes, into our old boxes as opposed to looking forward and saying, "Okay. Well, obviously this is what the deal is now, whether they were paying attention to x, y, or z, whether they ignored it or not. Here we are in today. Here's what it offers to society as opportunity. Here's what the dangers may be. Here's what our regulators know."

Peter Miller: Are you describing cannabis now, or are you still talking about Facebook?

Seth Adler: Both. That's precisely my point is that society does not know what to do with Facebook. Society also does not know what to do with cannabis. So then cannabis is not simply also a pharmaceutical entity. It's a completely different thing than we've ever dealt with before. So let's deal with it completely differently.

Peter Miller: Yeah, and I think similarly, it's fundamentally not something new. I mean, Facebook is just a town square at like a crazy, massive scale.

Seth Adler: Yeah.

Peter Miller: Cannabis has been consumed, enjoyed, probably feared for a millennia.

Seth Adler: Sure.

Peter Miller: As well. It's not what technology, these networks allow.

Seth Adler: We're back to the thing. So we'll just do the three final questions. This is exactly what the conversation that I was trying to have with you. I appreciate your time.

Peter Miller: Yeah, likewise.

Seth Adler: Tell you what they are. I'll ask you them in order. What's most surprised you in cannabis? What's most surprised you in life? And
on the soundtrack of your life, one track, one song that's got to be on there.

Seth Adler: So what's most surprised you in cannabis quickly?

Peter Miller: The people that have come out of the woodwork to now participate and get behind cannabis. That's surprising.

Seth Adler: Here come a different set of talent.

Peter Miller: Right.

Seth Adler: What's most surprised you in life?

Peter Miller: How adaptable people are. I couldn't imagine being a parent before I was a parent. Now that's my new normal. I couldn't have imagined being a cannabis entrepreneur before I was. Now that's my new normal. People will adapt almost every situation for better or worse.

Seth Adler: On the soundtrack of your life, one track, one song that's got to be on there.

Peter Miller: I knew you were going to ask that, and I looked at my top played of 2018 because I think actions speak louder than words.

Seth Adler: Yeah, sure.

Peter Miller: It was a George Harrison song, I Live For You, which there's not a ton of meaning in that other than I was listening to that album a lot in 2018. So there it was. But there's like 50 rap songs with SLANG in it, so that gets a lot of play when Billy and I are on the road. We try to pump ourselves up in the morning when it's 6:00 a.m. and we have people to meet. But I think-

Seth Adler: We'll go with the George Harrison song. Come on. You can't beat that.

Peter Miller: It's a great song, and if there had to be ... Going back to documentary, I have like a whole playlist called Sync Ideas. If we do make a documentary about this crazy journey, I have like a soundtrack already queued up.

Seth Adler: Peter Miller. Greetings from yesterday and have fun in tomorrow. Very much appreciate your time. Can't wait to catch up with you.

Peter Miller: Thank you.

Seth Adler: And there you have Peter Miller. Very much appreciate his time. Very much appreciate your time. Stay tuned.

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