Tilt Holdings' Abrupt Decision To Cut Its Social Equity Brands: What Lies Behind The Controversial Move?

Roz McCarthy, owner of Black Buddha Cannabis (BBC) and founder and CEO of Minorities for Medical Marijuana (M4MM), vocally challenged TILT Holdings Inc TLLTF on its seemingly contradictory actions. "You retained brands that lack diversity, so what message are you sending?" she questioned, in response to Tilt Holdings' sudden split with its social equity brands.

During the recent Benzinga Cannabis Capital Conference in Miami, McCarthy stressed this emerging pattern in the cannabis industry, urging potential investors and enthusiasts to be cautious and discerning.

What Happened

This recent move, under the new leadership of interim CEO Tim Conder, has seen the company bid adieu to prominent brands like Her Highness, Highsman and Black Buddha. Conder will be a featured speaker at the upcoming Benzinga Cannabis Capital Conference, set for September 27 - 28 in Chicago.

The move has sparked controversy, with stakeholders questioning Tilt's commitment to diversity and social equity.

Social Equity Brands Affected by TILT Decision

Her Highness, based in New York and founded by Laura Eisman and Allison Krongard, champions female representation in the cannabis industry. Highsman, which was created by former professional football player Ricky Williams, and McCarthy's Black Buddha Cannabis, were surprised by the company's sudden decision, wrote co-founder, and executive editor of Green Market Report, Debra Borchardt.

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“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," said Conder. "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.”

McCarthy, particularly, expressed disappointment with Tilt’s sudden pivot. The partnership between Black Buddha and TILT was celebrated with much enthusiasm back in 2022 with Gary Santo at the helm of Tilt and Conder on its board. McCarthy’s astonishment is compounded by the company retaining brands that weren’t focused on diversity. “I never want to hear from Tilt that they are focused on social equity,” she remarked.

In addition, this unexpected decision comes amid a capital raise, leaving McCarthy scrambling to find a new partner to help distribute her products. McCarthy said, "As a brand, we’re committed to Massachusetts and Pennsylvania, but now we have to re-center. It’s not fun times.”

Eric Hammond, CEO of Highsman, took a more neutral standpoint. “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.”

What's Next?

In another twist, TILT, during its earnings call, also declared its intention to sever ties with the New York Shinnecock Nation. The decision comes amid challenges posed by unauthorized cannabis operations on Shinnecock land.

Shifting its focus to its Jupiter vape business, TILT intends to revitalize the declining sales in that sector. Brad Hoch, interim CFO, indicated that supply constraints had majorly impacted the revenue. Despite concerns raised by analyst Pablo Zuanic regarding the pricing strategies in the vape category, Hoch remained optimistic, placing his faith in innovation.

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“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,” concluded Conder.

Price Action: TLLTF shares were trading 11.35% down at $0.025 per share at the time of publishing Tuesday at market close.

For those keen to explore further the equity brand strategies in the cannabis world, consider joining us at the Benzinga Cannabis Capital Conference is set to return to Chicago on September 27 and 28. Get your tickets today before prices rise, and position yourself at the heart of cannabis investment, retail, culture, and branding. All information is available on bzcannabis.com

Image by Benzinga