The Tinley Beverage Company Inc. (CSE:TNY) recently hired the former president of one of the largest beverage alcohol distributors in the United States
SmallCapPower | December 7, 2018: The Tinley Beverage Company Inc. (CSE:TNY) is a leading pure-play cannabis beverage company with operations in the United States. The Company makes liquor-inspired, alcohol-free, cannabis-infused beverages for use in California. Tinley Beverage also manufactures the ‘Hemplify’ product line, which is available in retail locations in California as well as online across the U.S. Tinley intends to leverage consumer and operational learnings in California to launch operations in Canada and Nevada, followed by other territories.
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Tinley Beverage Company stock currently trades at a market capitalization of C$44.8 million with a price-to-book multiple of 6.30x. Two big potential industry catalysts could ignite shares of cannabis-infused consumable companies, such as Tinley Beverage, in 2019. First, the Government of Canada is expected to legalize commercially-manufactured edibles and concentrates at some point next year. Second, the Farm Bill in the United States, which is expected to pass as soon as mid December, will remove hemp from the Controlled Substances Act, effectively making it federally legal in the U.S. Hemp contains cannabidiols, also known as CBDs, which are thought to have therapeutic properties, such as reducing anxiety or as an anti-inflammatory.
In a recent interview Sean Murphy, Director of hemp analytics at New Frontier Data, said the CBD industry grew by nearly 40% in 2017, and predicts that CBD sales could surge to $845 million by 2019, and more than $2 billion by 2022. Thus, Tinley Beverage Co’s future appears to be bright as the cannabis industry evolves from smokable dried flowers and oils to infused beverages and other edibles.
Investment Thesis:
- Exclusive cannabis-based product offerings
- Pending production facility
- Experienced management team
Exclusive cannabis-based product offerings
Cannabis is increasingly consumed in lieu of alcoholic beverages during the last several years. Alcohol sales have declined ~13% in the United States where cannabis has become legal. The switch from alcohol to cannabis is easier in States where recreational cannabis is legal. In order to capture this shift in demand, Tinley Beverage Company has designed its THC drinks using the same extracts and ethers as alcoholic beverages and yet remaining alcohol-free. 
Its THC-infuse beverages are created by a California liquor formulator, which allows consumers to enjoy cannabis in alcoholic beverage formats. Tinley Beverage Company offers two key product lines – Tinley Cocktails (Lime Margarita and Flying Mule) and Tinley ’27 (Coconut Rum Extract, Amaretto Extract, and Cinnamon Whisky Extract). Tinley Cocktails are available throughout California, whereas Tinley ’27 production will start in Q1 2019.
THC drinks use terpene and undergo emulsification for ‘high’ effects depending on the type of drink (e.g. euphoric margarita vs. energetic cinnamon whisky vs. cerebral amaretto). The hard-liquor style products contain 85 mg of THC (10 mg per 1.5 oz shot serving, 8 servings), while ready-to-drink wine cooler style cocktails contain 10 mg THC (single serving).
Cannabis margarita is available in dispensaries and home delivery services in Los Angeles, Orange County, San Diego, San Francisco, Oakland, Sacramento, Eureka, Santa Cruz and other key markets in California.
Additionally, Tinley Beverage Company is selling CBD drinks through premium grocery, natural food and convenience stores throughout Los Angeles and Orange County in California. This will result in brand awareness in dispensary channels.
Also, there is a shift in the non-alcoholic beverage space – people are moving from sugary sodas to healthier drinks. Tinley Beverage is attempting to tap this demand change with the creation of a hemp CBD beverage that can be sold in both mainstream stores and dispensaries.
Pending production facility
Tinley Beverage is building a 20,000 sq. ft. cannabis beverage manufacturing facility on a 45,000 sq. ft. lot in Long Beach, California. Currently, the Company is manufacturing products in a temporary facility in the Coachella Valley during construction of the Long Beach facility. The facility will be an end-to-end solution for developing, manufacturing, distributing and merchandising beverage products. The Company is also developing an innovation center 15 miles south of downtown Los Angeles for R&D and the testing of its products.
Experienced management team
Tinley Beverage Co’s management team has significant entrepreneurial and executive experience in the cannabis and beverage industries. The Company’s CEO and Director, Jeffrey Maser, has more than 10 years of experience in venture capital, merchant/investment banking with a focus on emerging industries including marijuana, health foods and technology. He previously worked at Jacob Securities, where he was involved with cannabis companies in the U.S. and Canada. Mr. Maser was also associated with Watt Design Group, owned by Cott Corporation, for private label beverage branding.
A significant recent addition to the Company was Richard Gillis, as President of Tinley Beverage’s California division. Mr. Gillis is the former president of Young’s Market Company, one of the largest beverage alcohol distributors in the U.S., with $3 billion in revenue. He was also previously the EVP/General Manager of Coca-Cola Enterprises, Southwest USA. According to the Company, Richard Gillis chose The Tinley Beverage Company due to its manufacturing infrastructure, believing that a strong distribution network, such as the one he created at Young’s Market, is the key to success in the beverage business.
Outlook
The Tinley Beverage Company currently trades at a market capitalization of C$44.8 million with a price-to-book multiple of 6.30x. The rising shift in demand from alcohol to cannabis along with Tinley’s focused approach to cannabis-based beverages, backed by an experienced management team, should serve this Company well going forward.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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