TILT Holdings is a company that has seen its fair share of ups and downs in the past few years. (The highs were all the attention garnered by its line of extremely popular marijuana-infused edibles, and the lows were the scandal that erupted in the wake that led to the CEO getting fired.) But the TILT Holdings of today is a very different company from the TILT Holdings of even two years ago.
TILT Holdings Inc. is a publicly traded company that was founded in 2013 with a unique B2B cannabis business model. TILT Holdings is the creator of the first turn-key, private-label, white-label, and co-packing solutions for cannabis products. The Company operates a multi-tenant industrial-scale cultivation facility in Oakland, California, utilizing its proprietary cultivation technology. TILT Holdings also sells its harvest to wholesale buyers. The business model is simple: TILT Holdings provides its tenant growers with the best practices in cultivation technology and facility design, right down to the air filtration and light spectrum to use. The technology is scalable, with enough automation to manage large-scale operations
With the U. S. still in the beginning of the marijuana boom, it was only a matter of time before someone created an online directory that lists the companies and people involved in the cannabis industry, as well as a service to connect investors with businesses that are looking for financial assistance. In other words, an online marketplace like the one TILT Holdings is developing. The company, which is based in Irvine, California, and is a wholly-owned subsidiary of TILT Holdings Inc., has just announced that it has formed a partnership with a company called GAIN Capital Holdings and a company called Neutrino. The goal is to create a marketplace that connects cannabis businesses with accredited investors.. Read more about tilt holdings lawsuit and let us know what you think.
Exclusive interview with the future CEO of TILT Holdings, Gary Santo TILT Holdings (CSE:TILT) (OTCQB:TLLTF) has gone through a number of different iterations over the course of its existence. President Gary Santo is now preparing to take over as CEO on June 1 and lead the company through a period of growth. Santo spoke with New Cannabis Ventures about the change in leadership at TILT, the current business model and how the company will evolve in light of federal legalization. An audio recording of the entire interview is available at the end of this written summary. New Executive Director Santo has worked in finance for over two decades. Every company he has worked with has undergone some form of significant change, whether it was an IPO or mergers and acquisitions followed by delisting and re-listing. When he became interested in cannabis, Santo saw the need for such a transformative experience. He has watched TILT go back to basics to find a business model that works. With a stabilized foundation, the company is ready to grow, and Santo is ready to help it do so. He joined the company as Associate Director of Public Relations and Capital Markets. According to Santo, current CEO Mark Scatterday helped bring the company to where it is today, while former COO and president Tim Conder solidified the company’s foundation. Now TILT is ready to talk about growth, and that’s what Santo wants to focus on. TILT has funded itself with cash flow from operations for the past two years, but its shares are trading at a discount to other operators in the region, Santo said. He is aware that the change of strategy and course will affect market perception and wants to demonstrate that the company is able to execute its strategy and create shareholder value. Although Santo will assume the role of CEO, he will not be the only one contributing to TILT’s growth. Mr. Scatterday will remain Chairman of the Board and will also be engaged in research and development. Joel Milton is the Associate Director of Business Development and leads the growth and sales initiatives. Foster Boone heads the company’s crop processing division. Rosanna Valencia-Fernandez recently became director of marketing, and Cristina De Tomasi, who worked with Santo at Columbia Care, takes over as director of business development. Plant care company TILT has processing facilities in Massachusetts, Pennsylvania and Ohio. In this sector of activity, the company mainly focuses on playing in the B2B segment, as in the technology part of the business. It is necessarily vertically integrated into Massachusetts. TILT has a 100,000 square foot facility where produce is grown, processed and manufactured. The company has one pharmacy and two other full-service stores, and Santo said it sells products in 50 percent of pharmacies in the state. A wholesale market in Massachusetts allows the company to sell cannabis at a premium price of $3,500 to $4,000 per pound, Santo said. The TILT team knows this won’t last forever, but it is taking advantage of the current market dynamics. TILT operates a 35,000 square foot growing and production facility in Pennsylvania. The company sells products in 95% of pharmacies in the state. Standard TILT farms in Pennsylvania Ohio is TILT’s newest market. Earlier this year, the company took possession of a 10,000 square foot manufacturing facility and has the capacity to sell products in approximately 52 pharmacies in this market. According to Santo, TILT’s processing business has a gross margin of 50-60% and an EBITDA margin of 30-40%. Technology companies Jupiter, the inhalation technology division of TILT, distributes products under about 700 different brands, MSO and LP. This division accounts for approximately 60% of the company’s sales and 50% of its profits. Jupiter has partnered with a company that manufactures CCELL brand vaporization technology in China. Under this partnership, Jupiter conducts research and development, provides warranty service and distributes the CCELL technology. Jupiter is the evaporation technology division of TILT. According to Santo, Jupiter had a gross margin of 25% and an EBITDA margin of about 10%. Trademarks and national legalisation TILT is betting on brands as the future of the cannabis industry. The company has its own brands, but relies on partnerships with major brands. For example, the company partnered with Her Highness in Massachusetts, opening the doors to half of the state’s clinics. The company will seek to partner with leading FMCG brands in markets such as California. In doing so, the company will also be able to take advantage of the 700 connections it has built on the Jupiter site. Santo said this direction will create a more balanced business model. This model works for TILT in the current market without federal legalization, and Santo sees it working in the future when legalization occurs. There is much speculation that federal legalization will lead to the commercialization of cannabis cultivation, and Santo agrees to some extent. He believes that common varieties and high yielding plants are becoming commodities and should make way for specialized and artisanal varieties like TILT. In the retail sector, the COVID 19 pandemic has led to a significant change in consumer behaviour. People are already used to online shopping and home delivery. Once legalization is a reality, Santo expects the cannabis industry to see a proliferation of online retailers and large corporations. TILT will focus on specialty product supply chain ownership: Cultivation of special products, high-end production and distribution. Whether the product is sold in a department store, online or in pharmacies, TILT is determined to take its place in the industry. TILT focuses primarily on cultivation, production and distribution, rather than retail. Expansion into new markets The United States is the focus of TILT’s expansion, but the company doesn’t want to expand its presence too far. Instead, the company will look for new states near its current presence, focusing on markets such as New York, New Jersey, Connecticut and Rhode Island. Such a footprint could be of interest to California brands looking to establish themselves on the East Coast. TILT is considering other states further from its current location, such as Texas and Michigan, but any expansion would be intentional and focused on wholesale and distribution. Mergers and acquisitions are also on the company’s radar, but all potential transactions need to be tailored. TILT will not pursue mergers and acquisitions that would make it a competitor to its own clients. As for vape, the company can find deals to support more innovation, different form factors and different prices. This partnership is an important step towards TILT’s international expansion. For example, the company is working with Kanabo, an Israeli company. The company has received medical certification to sell one of its patented TILT inhaler devices in Israel and is working on medical certification to sell the device through its network in the EU. Balance sheet analysis According to Santo, TILT has a pretty clean record. The company has approximately $75 million in debt, split between senior and junior notes. The first bond matures in November of the following year and both bonds bear interest at 8%. As a cash flow positive company, Santo sees potentially interesting opportunities in the capital markets. According to Santo, TILT could refinance its current stake or create some kind of asset-backed line. TILT nearly doubled its cash position between the third and fourth quarters, although the fourth quarter was the most capital intensive for the company. In preparation for the Chinese New Year, the company is taking a large number of pre-orders for vaping devices. Santo said the growth in cash position is an indicator of the strength of the company’s operations. The management of the TILT is fully funded by 2021. Ms. Santo stated that she does not need to make large investments unless there is a compelling reason to go to market. Outlook for 2021 For 2021, the company expects revenue of $205 million to $210 million and adjusted EBITDA of $30 million to $32 million. For Jupiter, these figures reflect a return to normal buying habits. In 2019 and 2020, the industry is experiencing a vaping crisis. Just as the situation was beginning to subside, the COVID-19 pandemic began. The company expects evaporation to increase in 2021. In terms of facility operations, TILT has doubled the size of its canopy in Massachusetts and plans to open stores in the second half of the year. The company has also become more efficient. When TILT wanted to keep its head above water instead of expanding, it produced more biomass in Pennsylvania than it could handle. Today, Santo says, he has more options for extraction than biomass production. Efficiency is an important issue when preparing a company’s facilities. TILT tracks harvest efficiency, margins and yields. Last month, a record bloom was recorded at a plant in Pennsylvania. The company takes a focused approach to culture: She sells her plants in advance, plants, harvests and ships on time. Although it operates as an MSO, it also enjoys the stable support of the Jupiter company. Jupiter, a predictable and profitable operation, generates $130 to $150 million in revenue for the company. TILT has developed a strategy and a narrative that is easier for people to understand, and now, Santo says, the company needs to execute that strategy. For more information, visit the TILT Holdings website. Listen to the interview in its entirety: Stay ahead of the crowd by subscribing to 420 Investor, the largest and most comprehensive subscription service for cannabis dealers and investors since 2013. Carrie Pallardi, a Chicago-based writer and editor, began her career in health care. Today she writes, edits and interviews subject matter experts in various sectors. As a published author, Carrie continues to tell compelling new stories to her network of readers. Please contact us for more information.
TILT Holdings, a vertically integrated company servicing the cannabis industry, announced today that it has closed a financing with a group of institutional investors, led by 14 Twenty-One Capital. TILT brings together the best elements of the traditional and emerging cannabis industries, offering a premier brand strategy, product development and management, cultivation, and retail operations.. Read more about tilt holdings 10k and let us know what you think.
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