Investing in cannabis companies has reached a fever pitch, with shares of big names like Aurora, Tilray, and Canopy Growth being gobbled up a rate reminiscent of that of the tech boom in the late 1990s.
According to one analyst, however, one company about to go public on the Canadian stock exchange could be a sleeper hit. Debra Borchardt, best known for Green Market Report, hints that Tilt Holdings – a vertically-integrated marriage between software provider Baker Technologies, cannabis delivery company Briteside, facilities operator Sea Hunter, and cannabis producer Sante Veritas – could be a hot pot stock to watch. The firm is on track to do $70 million in revenue for 2018, and CEO Alex Coleman believes they'll reach $500 million by the end of 2019.
Borchardt believes that the robust individual offerings of the four companies will bode well for the firm, as well as the news that they are planning on acquiring vaporizer hardware company Jupiter with others to be announced soon. She adds that the majority of the businesses under the TILT umbrella do not actually touch cannabis, making them more profitable than some other related companies because they aren't affected by tough 280E tax laws in the United States.
When the companies announced the founding of TILT Holdings in May, they had collectively raised over $150 million in capital and securities. According to the terms of the agreement, Baker, Briteside, Sea Hunter, and Sante Veritas will own approximately 14.3%, 22.3%, 41.1%, and 22.3%, of TILT, respectively.
"The combined company is expected to allow TILT to provide a more holistic solution to the industry," said Baker CEO, Joel Milton, in a press release. "Baker's goal has always been to provide our clients a single platform that connects all of the tools and data they use on a daily basis. This merger is expected to be a win for us, the cannabis retail ecosystem and, most of all, the producers and dispensaries and their customers. Through this broader platform, with greater access to capital and resources, we are excited to introduce new technology-enabled products which continue to create value for our clients. While these are currently being generated internally, we now also expect to accelerate our offerings through complementary, future acquisitions."
As big-name pot stocks continue to run wild across the markets, TILT has the potential to rise above the rest quietly. Borchardt acknowledges that while the partnering companies have a lot of clout, it could take time before the wildly different businesses find their synergistic voice – particularly in Canada, where recreational cannabis sales are about to begin within weeks.