TILT Holdings Inc., a global provider of cannabis business solutions announced that an experienced retailer and operator will lend capital to TILT's Pennsylvania subsidiary, Standard Farms to construct and operate dispensaries under Pennsylvania's Senate Bill 773. Under the Commonwealth of Pennsylvania's Medical Marijuana Program, independent cultivators can apply for one permit that will allow for three dispensary locations.
"We applaud the Commonwealth for providing a positive path forward for a small independent grower like TILT's Standard Farms to compete in this vibrant marketplace. We are thrilled to have reached an agreement with an experienced retailer and operator to help fund this undertaking and provide construction and operational guidance along the way to ensure our success," stated TILT CEO, Tim Conder.
Standard Farms has been a grower and processor in the Pennsylvania market since 2019 and provides its own Standard Farms house brand and brand partner products such as Old Pal and Level to the majority of dispensaries across the state.
The agreement
Under the terms of a Secured Promissory Note, Standard Farms can borrow up to $10,500,000. Proceeds from the Note will be used to construct dispensaries obtained via a permit issued from the Department of Health, Bureau of Medical Marijuana, of the Commonwealth. Standard Farms permit will allow the construction and operation of up to three (3) medical marijuana dispensaries in the Commonwealth. Proceeds from the Note will also be utilized for the initial setup and operation of the Retail Locations.
The Note will mature on December 31, 2027, and will initially bear interest at 20%. The interest rate will automatically increase to 30% upon Standard Farm's opening a Retail Location and completing a first commercial sale in the Commonwealth ("Location Opening Date"). The interest rate will automatically increase to 40% six months after the Location Opening Date. No principal or interest payments will be due under the Note before the maturity date, and the Note may not be prepaid in cash or kind without Lender's prior written consent.
Because the capital is to fund the construction and operation of the new dispensaries, the Note is secured by a first-priority security interest in the retail assets of Standard Farms, and a second priority security interest in the equity interests of Standard Farms that are held by the Company's subsidiary Baker Technologies, Inc. The Lender entered into a Consent, Collateral Release and Subordination Agreement with TILT's existing creditors to subordinate the Lender's interest in the Baker Collateral and release the existing creditors' interest in the Borrower Collateral. The Lender's security interest is further described in in a Security Agreement, dated May 2, 2024, by and among Standard Farms, the Lender and Baker Technologies, Inc. (the "Security Agreement").
The Note and the Security Agreement include usual and customary loan provisions including: affirmative and negative covenants, events of default, representations and warranties. In the case of an event of default under the Note, Standard Farms may become obligated to pay a multiplied balance of up to four times the then-outstanding obligations under the Note, all obligations under the Note may be accelerated and Lender may exercise all remedies. All obligations under the Note are guaranteed by the Company, which guarantee shall terminate if and when a first priority security interest in the properly held retail assets of a wholly-owned subsidiary of Standard Farms is activated. In order to provide collateral free from prior liens, under the terms of the loan documents, Lender will have a first-priority security interest in the equity interests of any such wholly-owned subsidiary that Standard Farms may hold.
For more information:
Tilt Holdings
[email protected]
tiltholdings.com