In a surprise move by the company’s new leadership, Tilt Holdings (OTC: TLLTF) cut its social equity brands. These include:
- Her Highness, a female-centric brand based in New York and founded by Laura Eisman and Allison Krongard
- Highsman, founded by former professional football player Ricky Williams
- Black Buddha Cannabis, founded by Roz McCarthy, who is also the founder and CEO of Minorities for Medical Marijuana Inc.
All of the brands were released with little warning.
“TILT is evaluating and rationalizing our brand and product portfolio as we refine our strategy. In doing so, we came to the hard realization that Her Highness, Highsman, and Black Buddha are not the right long-term fit given the direction we are headed, and we really are not the right partner for them given the support they need to build their brands,” said Tim Conder, interim CEO. “We are working collaboratively with these brands’ respective teams through this transition to ensure that we support them the best way we can as they offboard from our platform.”
The company’s sudden change of heart surprised McCarthy, as the partnership with Black Buddha was made with great fanfare in 2022 when former CEO Gary Santo was in charge and Conder was on the board.
She also fumed at the company’s abandonment of the female and minority-owned brands.
“You kept other brands that weren’t diverse, so what are you trying to say here?” McCarthy posited. “You got rid of the woman-owned, the black-owned, and then the woman- and black-owned brand. How do I take that? I never want to hear from Tilt that they are focused on social equity.”
The surprise also came in the middle of a capital raise. McCarthy said a potential investor now backed away because of the news. Now she is scrambling to find a new partner to help distribute the product.
McCarthy is self-funded and her brand is only a year old.
“As a brand, we’re committed to Massachusetts and Pennsylvania, but now we have to re-center,” she said. “It’s not fun times.”
Highsman CEO Eric Hammond said, “As Highsman looks ahead to an exciting period of growth in tandem with this year’s football season, Tilt is simultaneously refining its brand strategy to leverage its unique strengths, and we have agreed the partnership no longer aligns with our evolving directions. We continue to be focused on meeting the needs of our community nationwide, delivering affordable, high-quality cannabis consumables, unique events, and ever-evolving lifestyle options – all wrapped in our dedication to Spark Greatness.”
In addition to showing these brands the door, Tilt announced on its earnings call that it was also stepping away from its partnership with the New York Shinnecock Nation.
“Due to challenges in New York, including unlicensed operators selling cannabis on Shinnecock land and the inability to bring in cannabis products from New York state license holders or sell cannabis products to New York state license holders, we are undergoing a deep analysis of the future prospects of this partnership to ultimately bring the Shinnecock and Little Beach Harvest on to the next steps on their journey,” Conder said. “During this analysis, construction has been put on hold.”
In the company’s recent earnings announcement, it noted that would focus on its Jupiter vape business. However, that area of the company has been experiencing declining sales.
“The decrease in revenue for the quarter was primarily driven by supply constraints in our Jupiter business. In fact, Q2 orders were higher on a year-over-year basis. However, the orders were back-end loaded, so we were not able to fulfill delivery within the quarter,” interim CFO Brad Hoch said on the earnings call.
Analyst Pablo Zuanic questioned the shift in focus to Jupiter, noting the race to the bottom pricing in the category. However, Hoch seemed unfazed by a price war in vapes and cited innovation in Jupiter products. Although the company said in its filing that Tilt had to settle a case this year with VPR Brands that accused the company of patent infringement.
“Through evaluation, we realized that we are significantly under-realizing the opportunity that exists through the brand partnerships and hardware innovation taking place in our Jupiter Research subsidiary,” Conder said. “Going forward, we will deepen our moat with existing and prospective hardware customers by helping them expand their businesses into new markets through our cannabis operations.
“We will continue to have a presence across all categories, but inhalation will be our focus,” he added.
The company is also retaining its partnerships with Old Pal Cannabis, which was co-founded by Rusty Wilenkin and Jason Osni, who wanted to create “the PBR of cannabis,” and Toast, which was founded in Aspen, Colorado.