TILT

Vertically-Integrated B2B Cannabis Company

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Overview

TILT (CSE:TILT;OTC:SVVTF) is a leading provider of products and services to businesses operating in the cannabis industry. The Company offers the contract manufacturing of marijuana in a variety of form factors, vaporizer and inhalation devices, business and consumer delivery services and a broad suite of software products for over 1,500 retailers and brands throughout the US, Canada and Europe. The majority of TILT’s products are customized to client specifications and branding, all enabling them to operate their businesses more efficiently and connect with their customers more effectively. The Company is organized in two main business units, Software & Services and Consumer Devices & Packaged Goods, designed to augment competencies across the organization in research, manufacturing, packaging and technology 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, using data analytics and discovery to produce new products helping shape the industry. Headquartered in Cambridge, MA, with offices throughout the US, Toronto and London, TILT has over 500 employees and has sales in 40 U.S. states and Canada and Europe.

TILT’s innovative business model is designed to empower the industry and 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 to form TILT Holdings and the Company’s public listing on the Canadian Securities Exchange in early December 2018, TILT has been able to acquire and integrate numerous market leading cannabis companies. Through these initiatives, TILT has emerged as a leading and comprehensive B2B cannabis company in the North American cannabis market. The Company’s early financial results establish TILT as one of the top U.S. revenue producing publicly traded cannabis companies.

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 dynamic companies TILT has acquired position the Company to offer the broadest range and highest quality products and services to support cannabis businesses on a global scale. More specifically, 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. TILT has a very unique and significant opportunity to drive growth and shareholder value by continuing to invest in expanding its product offerings and geographic reach.

As the cannabis industry’s most comprehensive provider of innovative software and services, TILT’s combined CRM and distribution platform, powered by Baker and Blackbird, helps its customers generate more revenue and build relationships with their customers through a variety of products featuring 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, with an average of $30 million in wholesale cannabis products shipped every 30 days and more than 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.

TILT’s Jupiter Research brand develops and manufactures the most innovative hardware on the market 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 and product efficacy. The Company has assembled an experienced and accomplished science team, which advances TILT’s understanding of cannabis and its efficacy for patients and consumers. The Company is currently researching molecular breeding and plant genomics, which can create high performance hybrid cannabis seed varietals that are optimized for medical, health & wellness applications.

TILT knows firsthand how challenging it can be for entrepreneurs to secure the capital, infrastructure, product, technology, and talent to scale effectively in such a dynamic, yet challenging industry. To address such barriers to entry and aligned with its mission of empowering and supporting license holders in legalized cannabis markets, TILT recently launched the TILT Inclusion Program, which is designed to support individuals that have been disproportionately punished by cannabis laws in the past, including the Controlled Substances Act.

Helping communities move beyond the socially-constructed barriers and historical stigmas surrounding marijuana, the TILT Inclusion Program supports cannabis license holders, regardless of social identities such as 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). Heading the team is CEO Alexander Coleman, who has served as founder and managing partner with a number of equity groups, including Annex Capital Management LLC and Sea Hunter Therapeutics.

Company Highlights

  • 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.
  • Unaudited pro forma 2018 annual gross revenue of US$97.3 million.
  • Unaudited pro forma January 2019 gross revenue of US$18.3 million.
  • 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.
  • 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.

Business Model

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, with subsidiaries that span verticals in the industry. Additionally, the company is 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 in Massachusetts, Ohio, Illinois, Arizona and Maryland.

TILT’s Portfolio

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.

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 will provide edibles to the adult-use market and Slate will offer medicinal products. TILT Director Gary Smith will be heading the company’s retail strategy, which includes e-commerce, subscription and retail applications for CBD.

Jupiter

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 vapourize without burning the oil. The company continuously improves its technology to keep up with industry trends and works with producers to ensure their technology works with their products.

Jupiter operates under a B2B business model. The company intends to expand its business platform to include customizable hardware for their clients and will be using Blackbird’s distribution network to distribute its products to dispensaries and producers.

Baker Tech and Blackbird

Baker Tech is the cannabis industry’s largest software company. 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 as software as a service (SaaS).

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, the company has raised approximately $12 million in capital.

TILT will be combining Baker’s platform with their 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.

TILT intends to expand Blackbird’s offering to include at home delivery services for retailers. TILT and Blackbird are expected to help set up this process for retailers.

Briteside

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

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. Additionally, the company’s management team consists of experts in the healthcare, pharmaceutical, commercial agriculture and finance industries.

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 will 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 will support 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 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.

International Opportunities

Canada

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 will provide 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 Health Canada is expected to approve several value-added products such as edibles and concentrates. The company is also interested in securing a dealer’s license, which will allow them to sell cannabis internationally.

Europe

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. Additionally, 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 will be increasing its production to 13 tons in the near term.

Management

Mark Scatterday — Interim CEO

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.

Robert Leidy — Senior VP of Business Development

Prior to co-founding Sea Hunter in 2017, Robert Leidy co-managed portfolios of private client assets for Alex Brown (2016 to 2017) and at Deutsche Bank (2010 to 2016) serving as a Financial Advisor. At these institutions, he specialized in long-term wealth management strategies for affluent individuals, trusts, endowments and pensions. He has served on the board of the Young Friends of the Red Cross (Chairman) since 2009. Leidy earned his degrees in political science and economics from Florida State University.

Geoff Hamm — Senior VP of Operations

Geoff Hamm is Baker’s COO and is responsible for overseeing all operations of Baker. He joined Baker in 2016 as its Vice President of Business Development and was promoted to COO in July 2017. Prior to joining Baker, Hamm served as the Vice President of Business Development for AppLovin, a company which provides the one place app developers can go to find all the tools they need to create great apps, get those apps discovered and build a sustainable business, from 2013 until 2016.

Hamm has leadership experience at all business stages, including start-ups, mid-stage and Fortune 500 companies, as well as expertise in SaaS, mobile analytics, mobile consumer acquisition and retention marketing, mobile product management and marketing and international business development.

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.

Lars Vaule — COO

Prior to joining TILT, Lars Vaule served as interim-CEO for an angel-funded technology solution developing HIPAA-compliant payment processing for independent medical offices and surgical centers. Prior to this, he was a President and Board member of Jones & Vining, a manufacturer of tooling and plastic components for the footwear and sporting goods industries, where he led the company’s revitalization, driving improvement in sales management and operations. He is also the founder of two technology companies – Shortlist and Signeta.com.

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.

Mark Scatterday — Director

Mark Scatterday is the Founder of Jupiter Research, now a wholly owned subsidiary of TILT, where he now serves as Senior Vice President of all Consumer Packaged Goods & Devices. Mark Scatterday is a lifelong entrepreneur with dozens of patents held. Mark’s early success was when he founded Proinnovative, a sporting goods and promotional products company that was started with his first invention – The Gripp. This led Mark to begin designing and manufacturing a wide range of products in China. Leveraging his unique expertise in product development, industrial design, value engineering, consumer marketing, and brand positioning, Mark was instrumental in the success of many startups including Njoy, an early leader of inhalation vaporization technology where he served as Senior Vice President of Manufacturing and Product Development. Inventing the first disposable electronic cigarette, Mark and Njoy were awarded several industry product design and packaging awards.


*Disclaimer: This profile is sponsored by TILT (CSE:TILT;OTC:SVVTF). This profile provides information which was sourced by the Investing News Network (INN) and approved by TILT, in order to help investors learn more about the company. TILT is a client of INN. The company’s campaign fees pay for INN to create and update this profile.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

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.