Looking to address growing market challenges, The Tinley Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) cut staff and paused some expansion plans while it focuses on its relocation from Long Beach to Blaze Life Holdings’ (BLH) Canoga Park cannabis manufacturing and distribution facility.
The change is expected to take place in third quarter of this year after the decommissioning of Tinley’s Long Beach bottling assets. The company is collaborating with Long Beach contract manufacturing clients to complete service requests before the end of March to ensure sufficient inventory for testing and product release during the transition.
Tinley’s said in January that it agreed to pay BLH a flat fee of $55,000 per month for manufacturing services at the Canoga Park Facility, as well as an annual fee of $70,000 for certain accounting and administrative services.
In return, BLH will pay Tinley’s referral fees for two years based on revenue received from co-packing canning services provided to Tinley’s existing clients who transfer their production to BLH. Tinley’s will continue to receive all revenue generated from the use of their bottling assets at the Canoga Park Facility.
To facilitate the move, the company has implemented measures to preserve capital and trim expenses, such as pausing its plan to re-enter Canada indefinitely due to market complexities and challenges to profitability.
“These steps recognize recent challenges in capital markets, growing costs in the California cannabis sector, and the need for superior manufacturing and distribution scale, benefits of which are expected to materialize following the move,” Tinley’s wrote in a Tuesday statement.
Tinley’s recently completed production runs of several SKUs, including batches of its own brand and those of its strategic partner BLH’s Illa-Canna LLC’s new infused drinks, and received new purchase orders from Total Wine & More.
In addition to reducing staff at the Long Beach facility, the company made changes to its board and management teams as well.
Rick Gillis has agreed to step down from his role as president of Tinley’s Brands USA effective immediately.
Director and CEO Ted Zittell, CFO David Hackett, and certain remaining employees and consultants have temporarily agreed to defer their respective salaries for a limited period of time.
Tinley’s received an advance of $200,000 from the remaining funds available to the company under the BLH loan, with the final $300,000 from BLH currently expected to be applied to BLH’s Canoga Park facility.