Tilt Holdings (OTC: TLLTF), a prominent multi-state operator (MSO) in the cannabis industry, has sent shockwaves through the sector with its decisions this week to sever ties with three social equity brands and to pause a joint venture with the New York Shinnecock Nation it was overly joyed to announce breaking ground on just about a year ago.
These unexpected moves, made under the leadership of the company's new interim CEO, Tim Conder, have drawn criticism and raised questions about Tilt's commitment to social equity and its strategic direction.
Tilt Gives the Middle Finger to Social Equity
In a surprising turn of events, Tilt Holdings has chosen to part ways with three social equity-driven cannabis brands:
- Her Highness: A female-centric cannabis brand founded in New York by Laura Eisman and Allison Krongard.
- Highsman: A cannabis lifestyle brand created by former NFL running back and Heisman Trophy winner Ricky Williams.
- Black Buddha Cannabis: A wellness-focused brand launched by Roz McCarthy, the CEO of the nonprofit Minorities for Medical Marijuana.
These brands, aimed at fostering diversity and inclusivity within the cannabis industry, were unceremoniously released without much warning. The decision sparked immediate backlash, particularly considering Tilt's stated commitment to social equity initiatives.
Conder explained the decision, stating that these brands were not aligned with Tilt's evolving strategic direction. However, critics, including Roz McCarthy, expressed frustration and confusion over why Tilt retained non-diverse brands while cutting ties with those promoting diversity. McCarthy's anger was further intensified by the abruptness of the decision, which caught her and others off guard.
Shinnecock Partnership on Pause
In addition to the brand cuts, Tilt Holdings announced during an earnings call that it was suspending its joint venture with the New York Shinnecock Nation. The partnership aimed to establish a vertically integrated marijuana company called Little Beach Harvest on Long Island which broke ground just a year ago. Under the agreement, Tilt was to provide construction, management services, and funding of up to $18 million.
The abrupt pause in the joint venture has raised concerns and speculation. Conder cited challenges in New York, including unlicensed cannabis operators on Shinnecock land and regulatory restrictions on bringing in or selling cannabis products. While the tribe announced its intention to continue with the construction of their dispensary, the pause suggests uncertainty about the partnership's future.
Tilt's decisions have attracted scrutiny from many corners of the industry, including analysts and insiders. In Green Market Report, Pablo Zuanic, an analyst, questioned the company's shift in focus toward its Jupiter vape business, a move that seems at odds with declining sales in that segment.
While Tilt emphasized innovation in Jupiter products, it also faced a patent infringement case from VPR Brands earlier in the year.
The cannabis community has been left puzzled by Tilt's actions, especially given its previous and very public commitments to social equity and partnership agreements. Industry stakeholders are questioning whether Tilt's leadership truly understands the importance of diversity and inclusivity within the cannabis space.
Tilt Holdings is not unique in finding itself at a crossroads, facing both external and internal challenges. Much of the industry is in a similar position. Nonetheless, the decision to sever ties with social equity brands raises questions about the company's dedication to its stated values. While Conder's explanations suggest a strategic shift, they may not be enough to alleviate concerns about the future of social equity initiatives within Tilt, as actions speak louder than words.
Moreover, the pause in the Shinnecock partnership reflects the broader challenges facing the cannabis industry in New York and the complexities of navigating a rapidly evolving regulatory landscape.
As Tilt navigates this challenging period, it must carefully consider its decisions and communication strategies to rebuild trust within the industry and uphold the values it has publicly advocated for.
The eyes of both stakeholders and the broader cannabis community are on Tilt's next steps, which will undoubtedly shape its reputation and trajectory in the years to come.