Q&A with Gary Santo: CEO of TILT Holdings
The Cannabis 50 celebrates the organizations, individuals, and companies who are working to build a responsible, sustainable, and equitable future for the cannabis, hemp, and related industries. In addition to the 2021 Cannabis 50 Impact Review, we are also sharing interviews with our honorees to help spread their messages of positivity and growth.
TILT Holdings is a combination of leading cannabis companies delivering products and services to businesses in 36 states and a variety of countries, including Canada, Israel, Mexico, South America, and the European Union. Some of the core businesses include Jupiter Research, Standard Farms, and Commonwealth Alternative Care, Inc. MGO talked with Gary Santo, the CEO of TILT, to talk about their groundbreaking partnership with the Shinnecock Indian Nation of New York, the maturation of the cannabis market, and how the industry’s own internal demand for change drives it forward.
MGO: How long have you been involved in the cannabis industry? What inspired you to get involved with cannabis?
Gary Santo, CEO of TILT Holdings: I started looking at the cannabis industry around 2017-2018 after working with startup companies and companies going through massive transformations in industries ranging from consumer credit and financial services to gaming, leisure, and specialty pharma. At that time, cannabis was obviously an emerging and complex space, and I saw an opportunity to help the businesses in the industry tell their stories and establish themselves operationally in a pragmatic way. At the end of the day, there are business rules that apply across all industries. I joined Columbia Care in 2019 and helped take it public, and in July 2020, I joined TILT. The company was in a prime position for a turnaround with a B2B story that aligned with almost every aspect of my career and experience up to that point.
MGO: The cannabis industry saw several trends emerge in 2021. What do you think was the biggest one?
Santo: In 2021, we definitely began to see the beginning of the maturation of the cannabis market. One theme that stood out in was the speed at which packaged goods and brands began to take hold. It’s not just about price or potency anymore; it’s about consumers seeking out specific products and the brands behind them. Brands are now finding new, creative ways to stake their claim in multiple markets, building greater consumer bases and brand loyalty. This is where the core of TILT’s business lies—helping businesses expand their brands. It’s also where we differentiate ourselves from other MSOs. We take a strategic and intentional approach to helping cannabis businesses identify their niche in a certain market and work with them on a SKU-by-SKU basis, guiding them through the specific compliance and regulatory nuances of that market, from packaging to distribution. A few of the brands we successfully helped to expand into new markets in 2021 included 1906, AIRO, Her Highness, and Old Pal.
MGO: What were some of the biggest obstacles you faced in the industry in 2021? How did you manage and overcome these issues?
Santo: I think perhaps the biggest obstacle for the entire industry in 2021 was supply chain issues. To overcome these, we had to be even more strategic and tactical with our working capital, leveraging our longtime expertise in this area. The other challenge came from additional biomass and flower supply coming online in previously supply-constrained markets. TILT’s business model was designed to offset the resulting price compression as we quickly moved from selling bulk to packaged goods and strategically leaning into our brand partnerships to bring products and form factors that consumers are demanding.
MGO: What were the biggest highlights and most positive changes for TILT Holdings in 2021?
Santo: For TILT, it was about moving from being a holding company to a unified entity focused on a more B2B approach—while also working to drive synergies across our business divisions and eliminate operating silos inherent to the cannabis industry. Equally as important was our dedication to building trusted partnerships with the brands, MSOs, and LPs that we work with. None were bigger than our historic partnership with the Shinnecock Indian Nation on Long Island, New York, which we entered to support the development of its vertical cannabis operations. The project, Little Beach Harvest, is wholly owned by the Shinnecock and is a true social equity partnership in every sense of the word. It’s a huge step forward in creating equity for indigenous communities in the cannabis industry and will serve as a driving force for continued economic growth for the nation. We’re extremely proud to be a part of such a meaningful relationship and hope that our Shinnecock partnership might serve as a potential framework for other social equity initiatives in the industry in 2022 and beyond.
MGO: What should the cannabis industry be focused on in 2022—and beyond—to keep it moving forward in a positive way?
Santo: We’re encouraged by the market’s ongoing development and expansion. It’s important that companies focus on responsible, intentional, and pragmatic scaling. They also need to put more strategic initiatives into action surrounding diversity, equity, and inclusion that go beyond capital. We anticipate that the discounting and pricing pressures that were a hallmark of many state markets in the second half of 2021 will continue into 2022. This holds for the limited license eastern states, where TILT has a meaningful physical presence, as well as California with its well-publicized imbalances between supply and demand.
MGO: How do you think the cannabis industry will continue to evolve in 2022? What are you personally most excited about?
Santo: It’s always exciting to watch emerging industries move from being considered “niche” to becoming more mainstream. What makes this industry unique is that, unlike most other emerging sectors, you would be hard pressed to find someone who does not have some knowledge of cannabis—whether it’s about the plant’s medical virtues, its counter-culture aspects, or the 100 years of prohibition and injustice. Instead of educating the market about what cannabis is, operators have had to work almost as hard to address these preconceived notions, and rightfully so. Seeing cannabis declared as an essential service during the early days of the COVID-19 pandemic was a clear signal that this is not a fad industry, but one that is here to stay.
I’m excited to watch both TILT and other operators who have embraced this notion continue to evolve as true operating organizations built to last with a laser focus one stablishing a foundation built on business fundamentals. This is great news for consumers as well as those who choose to invest. The value proposition is off the charts right now. Unlike several industries that have suffered from the pandemic’s effect on the economy, cannabis continues to grow, adding jobs to the economy. Public sentiment is favorable, consumer demand is growing, and states are continuing to adopt. Given the current political climate, I think this could be the election year where cannabis is legislated at some level.
MGO: Who else in the cannabis industry inspires you by making a positive impact?
Santo: One of the most inspiring things about this industry is the demand for change and equality that comes from within. Despite companies having to navigate and operate within layers of complex regulations, without access to traditional banking options, and weighted down by the burden of significant taxation, the cannabis industry is only becoming more steadfast in its demands for social justice, criminal justice reform, social equity, and inclusion.
And it’s not just activist voices and nonprofit organizations demanding and making change. Cannabis consumer brands are going the extra mile to make a difference, whether that means helping others to become part of the legal industry or educating consumers who are looking for a brand they can support. The depth of true cause-based and backed brands like Her Highness or Farmer and the Felon (both of which support the Last Prisoner Project) gives consumers a reason to get involved in a way that goes beyond brand loyalty and actually makes a difference.
It’s not often we’re giving the chance to be on the leading edge of an industry so focused on incorporating social equity and inclusion from the very beginning. Together, we’re bringing back the truth of cannabis and what it meant before prohibition—whether it was used for medicinal, religious, or even celebratory reasons, cannabis meant community. And rebuilding that sense of community, that sense of inclusion and equality, is truly the most inspiring part of this industry.