In a few short months at the helm, Tilt Holdings interim CEO Tim Conder has initiated significant cost reductions and reevaluated brand partnerships – including cutting ties with some social equity brands – while shifting focus to the cannabis company’s vape hardware business.
The expense-cutting campaign, which included an undisclosed number of layoffs in the second quarter, is projected to save the Phoenix-based marijuana multistate operator $8 million annually.
In early September, Tilt announced a $1.4 million deal to sell its stake in a joint venture with the Shinnecock Indian Nation in New York, ending the company’s plans to open a Little Beach Harvest store with the Native American tribe.
Conder, who took the interim post in April after the resignation of Gary Santo, aims to put the MSO on a path to profitability.
It’s his second stint as a Tilt executive since 2019, though he’s remained on the board.
In early 2019, Conder sold his Nevada delivery service, Blackbird, to Tilt for $50 million.
In December 2020, the cannabis entrepreneur reacquired Blackbird from Tilt for approximately $15 million.
He then sold it again in mid-2021 under undisclosed terms to Herbl, the California distribution giant that collapsed in June.
In a wide-ranging interview with MJBizDaily, Conder discusses his top priorities in his comeback with Tilt, the company’s new strategic direction and other key developments.
What are your top priorities since taking the interim CEO position?
When I took the interim CEO role, the company was cash-consumptive, really in an environment where that doesn’t make a lot of sense.
Our immediate priorities were to reduce our cost structure and our expenses and increase operational efficiencies to ultimately achieve profitability.
What initiatives has the company rolled out to address these top concerns?
First and foremost, reducing our cost structure.
Taking a really hard look at expenses and, in some very unfortunate cases, some head-count rationalization.
In terms of head count, can you provide specifics? Did you provide that to Wall Street?
We didn’t provide specific numbers. It wasn’t a huge percentage of our total employee base.
It was really focused on specific business units that were cash-consumptive to really help those specific business units achieve profitability and help the company achieve profitability.
Do you expect more head-count reductions this year?
We do not.
When I make those kinds of moves, I like to do it all at once so the company can focus on the future and move forward, instead of continuing to relive some of these more challenging moments of our past.
How have your previous roles at Tilt – including director, president and chief operating officer – provided insights into the company’s opportunities and challenges, and addressing them?
It’s really made me very familiar with the company and its operations. And, to an extent, the employee base.
It’s been really nice to step back into a team that I’m familiar with and an operation that I understand.
Tilt recently cut some ties with social equity brands such as Her Highness, Highsman and Black Buddha, which drew criticism from industry watchers and social equity advocates. What drove that decision?
We had a lot of overlap in product offerings and within our brand portfolio.
And if you’re trying to sell similar products at similar price points from two different brands, you’re doing those brands a disservice.
And we had made promises and commitments to nascent or emerging brands that we weren’t going to be able to live up to.
We’re a platform that does well with existing brands with a proven track record in certain markets by helping them to expand into new markets where we have distribution and penetration.
We are not a platform that’s going to be able to launch brand-new brands.
It had absolutely nothing to do with social equity or the ownership makeup of those brands. We will continue to do DEI work at Tilt, it’s incredibly important to our team.
What else did the brand and product portfolio evaluation reveal?
We have a unique differentiator as a manufacturer and distributor, and our subsidiary Jupiter is one of, if not the largest, hardware distributor in North America.
Our focus going forward from a third-party-brand standpoint is going to start with inhalation. So vape, flower, concentrates, but a really heavy focus on vape.
We essentially create a flywheel at Tilt, where brands procure their hardware through our Jupiter subsidiary, we cultivate and manufacture their products and then we distribute those products throughout our distribution network, which includes our own retail stores as well as third-party retail stores.
Can you provide any updates on the latest developments with the Shinnecock Indian Nation?
It’s no secret that the state of New York has faced a number of challenges in its adult-use rollout.
And, unfortunately, Shinnecock Nation was not unaffected by similar challenges related to illicit or unregulated operators.
The Shinnecock Nation has a unique challenge. There’s an inability to bring products either into the nation from New York state or out of the nation into New York state.
Ultimately, we negotiated a buyout of our investment in that partnership.
The nation is probably a couple months away from opening the dispensary that we built together.
And we believe they have the opportunity for success with their new partner, and now we’ll be able to focus on the core elements of our business.
Tilt has posted some significant operational losses the past four calendar years, and in a second-quarter earnings call last month, you said the biggest area of focus was returning the company to profitability. How do you intend to reach that goal?
We’ve talked about some of the difficult decisions that we’ve made from a head-count rationalization and expense-reduction standpoint … (and) the operational efficiencies that we’ve achieved over the past several months are getting us to a place where we believe we can achieve profitability.
We’re excited about the progress that the company has made.
We think we have a lot of opportunity, not only in the markets where we currently operate – so, Massachusetts, Pennsylvania and Ohio in manufacturing and cultivation and, in the case of Massachusetts, retail – but (also) opportunity to expand our footprint and continue to serve our brands and additional markets in the future.
What are some near-term or longer-term business opportunities for Tilt that you’re particularly excited about?
We’re really excited about some prospective or potential brands that we’re looking to onboard in the next few months.
We’re also really excited about some hardware innovation that’s taking place at Jupiter that not only iterates on existing product lines but also introduces new products that we believe can help grow the pie for vaporization and inhalation.
I think there’s a lot of opportunity for Jupiter in hardware innovation and hardware, in general, in the upcoming months and years.
(This interview was edited for length and clarity.)
Chris Casacchia can be reached at email@example.com.