Vertically-Integrated B2B Cannabis Company
This TILT Holdings Inc. profile is part of a paid investor education campaign.*
TILT Holdings Inc. (CSE:TILT;OTC:SVVTF) is a leading provider of products and services to businesses operating in the cannabis industry. The company offers contract manufacturing services for a variety of form factors, businesses and consumer delivery services in addition to a broad suite of software products for over 1,500 retailers and brands throughout the US, Canada and Europe.
Most of TILT’s products are customized to client specifications and branding, allowing clients to operate their businesses more efficiently and connect with customers more effectively. The company is organized into two main business units: software and services and consumer devices and packaged goods. Each business unit is designed to augment competencies across the organization to deliver end-to-end services and customer solutions.
All of TILT’s products are supported by an extensive research process led by scientists and engineers who use data analytics to design new products. Headquartered in Cambridge, Massachusetts, with offices throughout the US, Toronto and London, TILT has over 500 employees and sales in 40 US states, Canada and Europe.
TILT’s business model is designed to help cannabis entrepreneurs establish, build and grow their business profitably. The company is organized as an integrated combination of leading cannabis companies to deliver innovative solutions to problems, challenges and opportunities throughout the industry. TILT’s mission is to elevate cannabis businesses so they can compete at the forefront of a growing industry.
Following the initial business combination and public listing on the Canadian Securities Exchange in early December 2018, TILT has acquired and integrated numerous market-leading cannabis companies, developing a leading B2B cannabis company in the North American cannabis market.
TILT manufactures customized cannabis products and devices for its business customers while also providing them with a route to market and software and services, all helping them realize operating efficiencies and sales growth. The company is uniquely focused on investing in the research and development necessary to deliver leading-edge products and services to one of the fastest growing industries in the world.
The companies TILT has acquired position the company to offer a broad range of high-quality products and services that support cannabis businesses across the globe. For example, TILT can offer customized cannabis products and devices through Jupiter, deliver them through the Blackbird route-to-market and have its retail customers connect to consumers through Baker.
As a comprehensive provider of innovative software and services, TILT’s CRM and distribution platform, powered by Baker and Blackbird, helps its customers generate more revenue and build customer relationships through a variety of products that include services such as online ordering, customer loyalty, messaging and analytics.
Through its comprehensive technology platform, TILT provides best-in-class distribution services, logistics operations and software solutions for each touchpoint in the cannabis supply chain. The company averages US$30million in wholesale cannabis products shipped and over 100,000 deliveries to consumers across Nevada and California. TILT is expanding its existing software and service offerings to cover the entire supply chain, from cultivation through to production, packaging, distribution and retail sales.
Jupiter Research develops and manufactures innovative hardware with high-performance state-of-the-art vaporization technologies. Jupiter’s proprietary CCELL® ceramic technology consistently heats the oil in the vaporizer to reduce burning, producing a better user experience. The technology is well-regarded and widely-used throughout the industry.
TILT is also accelerating scientific research on product efficacy. The company has assembled an experienced and accomplished science team, which advances TILT’s understanding of cannabis and its efficacy. The company is currently researching molecular breeding and plant genomics, which can create high-performance hybrid cannabis seed varietals that could be optimized for medical, health and wellness applications.
TILT knows firsthand how challenging it can be for entrepreneurs to secure the capital, infrastructure, products, technology and talent to scale effectively in a dynamic and challenging industry. To address such barriers to entry, TILT recently launched the Cannabis Inclusion Program, which is designed to support individuals that have been punished by cannabis laws in the past. Helping communities move beyond the socially-constructed barriers and historical stigmas surrounding cannabis, the Cannabis Inclusion Program supports cannabis license holders, regardless of age, culture, ethnicity, gender identity, sexual orientation, physical ability, race, religion, size or socioeconomic status. The program provides various levels of support across the needs of the business including application development, cultivation infrastructure, software and services, talent management and capital investment.
TILT’s management team has numerous years of experience in capital markets, specifically mergers and acquisitions (M&A).
TILT’s Company Highlights
- A vertically-integrated, B2B-focused cannabis company.
- Seven subsidiaries are the backbone of service offerings.
- The global cannabis market to reach US$146.4 billion by 2025.
- Canadian cannabis market to exceed $7 billion in sales in 2019.
- European cannabis market to reach 115.7 billion euros by 2028.
- Revenue derived from licensed software, business and consumer delivery services, vaporizing devices and cannabis products.
- 100,000-square-feet of total retail space to come online in the near term in Massachusetts, Ohio, Illinois, Arizona and Maryland.
- $1 billion in pending acquisitions.
- Three core brands: One, Chroma and Slate.
- Blackbird now delivers cannabis products to over 600 retail locations across California and Nevada.
- Over 400 SKUs for medical and recreational products.
- Management experienced in M&A and capital markets.
The Global Cannabis Market
The global cannabis market is expected to reach US$146.4 billion by 2025. The market is growing as more countries legalize medical and recreational cannabis. Another factor driving the development of the market is the medicinal use of cannabis, which has become normalized in recent years. Research is exploring how the plant can be used to treat a variety of diseases and conditions, such as cancer, mental disorders and chronic pain, among others. The market is also looking for new cannabis delivery methods to attract new consumers, as patients turn to alternative health and wellness products.
TILT intends to become a dominant, vertically-integrated B2B cannabis company that provides cannabis companies with a comprehensive range of products and services across verticals. TILT derives its revenue from a broad range of sources including licensed software, business and consumer delivery services, vaporizing devices and cannabis products. Within this model, TILT is well-positioned to become an industry leader for B2B solutions and consumer products.
TILT offers these services through its aggressive acquisition strategy including subsidiaries that span numerous verticals in the industry. The company is also developing a network of independently owned and operated stores. Within a year, TILT expects to have approximately 100,000-square-feet of total retail space across Massachusetts, Ohio, Illinois, Arizona and Maryland.
TILT has completed numerous cannabis-related acquisitions that span different verticals across the cannabis industry. In 2018, the company acquired 11 cannabis companies and currently has a pipeline of possible acquisitions worth over $1 billion.
TILT’s Products and brands
TILT has developed three core brands: One, Chroma and Slate. These brands provide both medical and adult-use products with over 400 unique SKUs developed to supply the two markets. TILT is currently aiming to develop next-generation products that are novel, effective and offer customized experiences for consumers.
TILT’s One brand is expected to offer consumers flower and cartridges to both markets, while Chroma is expected to provide edibles to the adult-use market and Slate is expected to offer medicinal products. TILT Director Gary Smith heads the company’s retail strategy, which includes e-commerce, subscription and retail applications for CBD.
Jupiter Research develops and manufactures vaporization technology for cannabis oil. Jupiter has developed a CCell ceramic technology that consistently heats the oil in the vaporizer, allowing the THC to vaporize without burning the oil. The company continuously improves its technology to keep up with industry trends and works with producers to ensure the technology works with the client’s products.
Jupiter operates under a B2B business model. The company intends to expand its business platform to include customizable hardware for its clients and plans to use Blackbird’s distribution network to distribute its products to dispensaries and producers.
Since acquiring Jupiter in early 2019, TILT has integrated the company’s software and supply chain services into Jupiter’s operations, allowing the company to develop stronger customer relationships, deliver products more quickly and expand its physical presence in California. Jupiter has also expanded its product lines by offering its B2B partners a starter kit that includes a black Liquid6 power supply and a one milliliter fill-your-own cartridge.
Baker Tech and Blackbird
Baker Tech is one of the largest software companies in the cannabis industry. The company helps dispensaries generate revenue and build relationships with consumers through a variety of products and services, such as online ordering, customer loyalty, messaging and analytics. Baker offers its products under a software as a service (SaaS) model.
Baker works with over 1,000 dispensaries across Canada and 24 US states. Approximately one out of three dispensaries in the US uses Baker’s products and the company manages a database with over two million unique consumers. To date, Baker has raised approximately $12 million in capital.
TILT intends to combine Baker’s platform with the company’s distribution subsidiary Blackbird. Blackbird provides logistics operations and software solutions for the cannabis supply chain. The company is working with over 250 wholesale and retail cannabis operators in Nevada and California and intends to aggressively expand throughout the US. Blackbird transports approximately $30 million in wholesale cannabis products monthly and has completed over 100,000 deliveries across Nevada and California. Since Blackbird’s inception, the company has expanded from Nevada into California and now delivers cannabis products to over 600 retail locations across both states.
In April 2019, TILT expanded Blackbird’s delivery and supply chain services to include an on-demand cannabis delivery service for consumers in the great Los Angeles area. Through the website BlackbirdGo.com, Blackbird can provide patients and adult-use consumers the ability to order cannabis products for delivery in two hours or less from retailers and brands. The website also offers a pick-up option for pre-orders.
Briteside is a fast and cost-effective prefabricated modular construction company that builds state-of-the-art cultivation and production facilities. The prefabricated 625-square-foot grow rooms can be installed at half the price and 70 percent of the time of purpose-built rooms, allowing TILT to enter the market quicker than its peers. The rooms can also be adapted to house genetics, cultivation, extraction or packaging purposes.
Standard Farms is a multi-state medical cannabis operator focused on greenhouse cultivation and CO2 extraction. Standard Farms’ proprietary CO2 extraction and cold press techniques preserve between 55,000 ppm and 75,000 ppm of secondary monoterpenoid profiles when compared to conventional extraction processes that preserve less than 4,000 ppm.
Standard Farms has developed a health and wellness product line that meets the needs of patients. The company’s management team consists of experts in the healthcare, pharmaceutical, commercial agriculture and finance industries.
In April 2019, Baker loaned up to US$3 million to Standard Farms to facilitate a working relationship that could help accelerate the time to market for both companies in Ohio. As the seventh most populated state, Ohio is set to become one of the largest limited license states in the US. As of April 2019, Ohio was home to 24,556 patients and 1,489 caregivers across the state.
Sea Hunter Therapeutics
Sea Hunter Therapeutics is a vertically-integrated consumer packaged goods manufacturer and a source of capital and management expertise for qualified cannabis license holders. The company has operations in multiple states with limited-licensing opportunities. To date, the company has raised over $125 million in financing for the industry.
Sante Veritas Therapeutics
Sante Veritas Therapeutics is a late-stage ACMPR applicant with a fully-developed facility in Powell River, British Columbia and a robust portfolio of wholesale contracts. The company intends to develop innovative, pharmaceutical-grade cannabis products through select genetics and state-of-the-art grow environments.
Cannabis Inclusion Program
In January 2019, TILT launched its Cannabis Inclusion Program, which supports license holders regardless of age, culture, ethnicity, gender identity, sexual orientation, physical ability, race, religion, size or socioeconomic status. The program provides assistance in application development, cultivation infrastructure, software, services, talent management and capital investment.
“We know it can be challenging to secure the capital, infrastructure, product, technology, and talent to effectively scale in the cannabis industry,” said former TILT CEO Alex Coleman. “Our goal is to remove those barriers to entry, and help these individuals navigate the complex cannabis regulations by providing them the support to successfully get up and running in half the time at a fraction of the cost.”
TILT has piloted the program in Massachusetts with several contracted not-for-profit organizations. The state has recently legalized adult-use cannabis, but businesses focused on adult-use cannabis can only hold retail licenses. Through TILT’s program, over 25 additional applications have been filed in Massachusetts and other states over the past several months.
One of TILT’s subsidiaries, Sante Veritas Therapeutics, has a 50,000-square-foot cultivation and production facility in Powell River, British Columbia. There is room for adding onto the facility as the property features several hundred square feet in improved land and adjacent buildings. The property offers significant cost advantages as the company has secured an agreement that provides them with power at C$0.5 per kilowatt hour. Additionally, TILT has access to shipping routes to Vancouver.
The Canadian cannabis market is projected to exceed $7 billion in sales in 2019. TILT intends to enter the Canadian cannabis market after October 17, 2019, when value-added products, such as edibles and concentrates, are added to the market. The company is also interested in securing a dealer’s license, which would allow TILT to sell cannabis internationally.
The European cannabis market is expected to reach 115.7 billion euros by 2028. Europe presents cannabis companies with a significant opportunity to expand their businesses as more countries are looking at legalizing cannabis in some way. Europe is home to over 740 million people who spent approximately 2.3 trillion euros on healthcare, creating a substantial market for medical cannabis users and those looking towards self-medication.
In December 2018, TILT signed an LOI to form a joint venture with Medical 420 (M420), a large-scale vertical cannabis company based in Macedonia, to provide cannabis processing, logistical support and supply chain management to the EU through M420’s north Macedonian assets and wholesale materials. TILT has obtained exclusive manufacturing and distribution rights of all products produced by M420.
“We are very focused on expanding TILT’s broad technology and infrastructure product offerings into expanding cannabis markets like Europe, which also has a substantial addressable market,” said Coleman. “While we continue to expect the US cannabis market to expand the fastest as well as being the largest, we see the substantial potential within the EU. Our partnership with M420 is further validation of TILT’s leadership in the industry and mission to deliver effective, comprehensive cannabis solutions to the entire globe.”
Macedonia has some of the best growing conditions in the world, and M420 leverages these conditions to cultivate, process and distribute a variety of CBD and THC products. Currently, M420 produces over five metric tons of cannabis annually and intends to increase its production to 13 tons in the near term.
TILT Holdings’ Management
Mark Scatterday — Interim CEO and Chairman
Mr. Scatterday is a lifelong entrepreneur and operator, having built a number of successful businesses. Most recently, he was the founder and CEO of Jupiter Research, a leading provider of vaporization and inhalation devices for the cannabis industry, which is now a wholly-owned subsidiary of TILT. Through the Jupiter acquisition, Mr. Scatterday is currently TILT’s largest shareholder.
Joel Milton — Senior VP of Business and Corporate Development
Joel Milton is Baker’s CEO and is responsible for overseeing every aspect of Baker. He co-founded and served as the CEO and a director of Baker since 2014. From 2011 until 2015, Milton served as the co-Founder of infoHubs, which provided portals between New York City and the visitors on the ground who wanted to find out about local events, stores and restaurants. He holds a BA in Psychology and Philosophy from Colgate University.
David Caloia — CFO
David Caloia has a very accomplished background in finance, having spent the first 16 years of his career at GE in finance and operations. While there, he maintained leadership positions in finance across the globe, the last as the CFO of GE Industrial Solutions, a US$3 billion global business with 15,000 employees worldwide. Prior to joining TILT, David was the Senior Vice President of Financial Planning and Analysis of Beacon Health Options, a multi-billion healthcare company owned by Bain Capital and Diamond Castle.
Tim Conder — COO and Director
Tim Conder was previously the Senior Vice President of Software and Services for TILT. He joined the company through its acquisition of Blackbird Logistics Corporation in January 2019. Since founding Blackbird in 2015, Conder has overseen the rapid growth of his business in two of the most robust cannabis markets – California and Nevada. Under his leadership, Blackbird has efficiently navigated the complex regulatory structures of both states, and currently operates five fully licensed cannabis distribution facilities across the region with plans to expand into several additional markets in 2019. Blackbird is a best-in-class distribution, delivery and technology business with over 200 employees and 75 compliant distribution and delivery vehicles.
Gary Smith — Director
Gary Smith has 30 years of experience in consumer-packaged goods. Prior to his appointment to TILT’s Board, he held senior management positions at PepsiCo, Red Bull and Big Red Inc. During his most recent position as CEO of Big Red, he built a diversified beverage company by acquiring numerous, complementary brands across verticals over a 10-year period, ultimately selling the business to Keurig and Dr. Pepper. Prior to this, he served as the COO and Executive Vice President of sales and distribution for Red Bull North America.
Robert Calhoun — Director
Robert Calhoun has more than 50 years of experience in private equity and investment banking, including public and private company board positions across a range of industries throughout his career. A graduate of Princeton, Mr. Calhoun began his capital markets career in the Investment Banking group at First Boston Corp. before transitioning to his private equity career with Monitor Clipper Partners, the firm he co-founded.
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The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with TILT and seek advice from a qualified investment advisor.