TILT Core Assets - the Real Truth We is there even a discussion on Sante Vertias - it is a non issue with TILT.
TILT’s core business provides an ancillary play on the growing US cannabis space through its vape hardware, distribution & technology business. We expect the US cannabis could reach $90B at maturity, vs $12.5B in 2019, with TILT positioned to benefit from the industry’s continued growth.
The base of our thesis on TILT revolves around its
Jupiter subsidiary, which distributes CCELL vape hardware. The business has seen robust growth (ex the recent hit from vape scare) and most importantly has been consistently profitable.
TILT breaks out revenue segments within five categories including accessories, technology, distribution, cannabis, and other. Accessories represents TILT’s Jupiter Technologies vape hardware business. Technology includes legacy Baker and Briteside (as well as some Blackbird revenue), while distribution is its legacy Blackbird business - and we believe it is best to look at the two segments together given they will all fall under the Blackbird umbrella. Cannabis primarily represents its Massachusetts & Pennsylvania cannabis operations. Accessories make up the largest portion of revenue at 70% in 3Q19, followed by cannabis at 17%, and technology & distribution at a combined 13%. Going forward, we expect cannabis sales to increase as a % of sales, as the company expands cultivation in PA & MA, and opens up dispensaries in MA.
Outside the US, TILT’s subsidiary Sant Veritas Therapeutics is a late applicant
to become a licensed producer in Canada, though given saturation in the Canadian market we do not believe TILT will invest behind this asset and instead look to eventually sell.