Tinley Beverage Company (TNY.C) jumps on California cannabis collective move

The Tinley Beverage Company (TNY.C) bubbled up the boards, jumping $0.065 to $0.395 today after the company announced it has begun accepting patients for what will henceforth be known as the Tinley Collective.

It’s funny how “collective” so readily conjures up memories of growing up around Hutterite and Mennonite colonies back in 1970s Southern Alberta, but in this case it’s Tinley’s big move to qualify for both cannabis purchase as an ingredient for their products, and direct sales to card-carrying cannabis patients in California.

According to the news release, Tinley Collective is registered as a Central Organization Cooperative Corporation (“COCC”) with the Office of the California Secretary of State.

Just what does this designation mean?

In Section 12201 of California’s Consumer Cooperative Corporation Law, co-ops are described to be “democratically controlled and are not organized to make a profit for themselves, as such, or for their members, as such, but primarily for their members as patrons.”

That’s the general, here’s the specific:

The Tinley Collective will consist of a group of qualified medical patients who band together under state law to collectively purchase the marijuana which Tinley Beverage Company takes and turns into tasty drinkable products to be distributed among the members.

Tinley Collective intends to distribute a regular party mix of alcohol-free flavors, such as Dark Caribbean Rum, Cinnamon Whiskey, and Amaretto, to name just a few.

Why no booze in their booze? Well, you could argue Tinley’s cannabis-infused concoctions don’t need it, being as they have enough potency on their own, but the other side of this is the alcohol-oriented flavours are really meant to follow the “spoonful of sugar helps the medicine go down” philosophy. Since raw tincture tastes like you’re licking the bottom of a bong, having a more dominant flavour at work is a good thing.

So, where does this move help you as an investor?

Quite simply, it’s a matter of de-risking. There’s relatively no overhead in this deal and Tinley Beverage has solved the issue of how to get the cannabis it needs for the products it intends to distribute, and a means to distribute those products to patients within the collective.

In short, this is kind of like an offtake agreement with a potentially loyal and secure customer base.

There are variations in California State code regarding COCC’s, so there may be even further benefits for the organization and its members, such as dividends on shares and memberships, but that’s for sorting out later.

Regardless, this move is the nitro boost Tinley needed to pop in the market again, after a hot and heavy late 2016. The company’s Hemplify business pushed forward recently with a landmark deal with LA Distributing Co., an agreement which gave Tinley access to potentially over 2,000 retail outlets in both Los Angeles and Orange counties.

Today’s announcement is a big one for Tinley, in that it’s the first real demonstration that the Tinley ’27 line of products has moved from concept to reality. and that could be a very real tipping point for the company. The markets certainly seemed to think something is brewing for the company, as shares jumped 19.7% on the news.

I’m not surprised by how Tinley traded today. California is the sixth largest economy on the planet and its wildly fragmented marijuana market is expected to be worth $6.5 billion annually by 2020.

If you live in California, you can apply to qualify as a member of the Tinley Collective on the organization’s website.

Company CEO Jeff Maser sent out an email today to Tinley Beverage Company shareholders.

Maser felt the Collective approval had put the company in fine position to, “procure cannabis from our suppliers in Humboldt County to finalize the fully-infused formulations.  We’ll then work to get sales samples to dispensaries, after which we’ll do a production run to fulfil orders.”

[…] “Opening this collective represents a significant milestone for the company and a critical component of our ability to offer cannabis-infused products via California’s extensive medical cannabis system. We will update our patients as our products become available.”

Sounds like 2017 is going to be a busy one for both Tinley and its investors.

–Gaalen Engen

http//twitter.com/gaalenengen

FULL DISCLOSURE: Tinley Beverage Company is an EQUITY.GURU client. Do your own due diligence before making any investment decision. This is my opinion dammit, get your own!

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