Denver marijuana tech firm Baker gets scooped up in four-way merger, with IPO planned

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Baker Technologies Inc., a Denver-based developer of software for cannabis businesses, has drafted a seemingly simple recipe for success: strength in numbers.

The startup that started out with desires of being a consolidator — acquiring and integrating other cannabis-centric technology firms — will itself be folded into a larger firm.

Under a four-company merger announced Tuesday, Baker will serve as a key ingredient of Tilt Holdings Inc., a newly formed provider of an assortment of cannabis services, technologies and products to feed the mushrooming multibillion-dollar global cannabis industry. The four-way merger is another deal in a wave of cannabis industry consolidation and comes on the heels of Monday’s giant $2.2 billion merger of Canadian marijuana firms Aurora Cannabis Inc. and MedReleaf Corp.

In addition to Baker, Tilt’s founding companies include: Briteside Holdings LLC, a Bend, Ore.-based marijuana delivery company; Sea Hunter, a Boston-based marijuana facilities operator and finance provider; and Sante Veritas Holdings Inc., a newly formed Toronto-based company that submitted applications to be a licensed marijuana producer in Canada.

Tilt is targeting a public offering in Canada and projecting a market capitalization of $500 million. By the end of this year, Tilt could post $70 million in revenue. That could grow to upward of $200 million by 2019, officials said.

“Right now, there’s a massive opportunity — where the Canadian public markets have really high multiples of revenue (for cannabis firms),” said Joel Milton, Baker’s co-founder and CEO.

But structure is lacking, he said.

Beyond this idea of growing more weed and selling more weed, the four companies combined under Tilt seek to fill in the gaps in the early-stage market.

“We’re providing the technology and infrastructure that this industry needs,” he said.

Baker sought to do just that since its founding in 2014, providing “Salesforce”-like customer relationship management software to dispensaries. Those shops can then offer services such as online ordering and loyalty programs; in turn, the dispensaries and Baker get loads of data and analytics.

Baker recently expanded its services by launching an Application Program Interface, better known as an API. The API allows for other ancillary technologies (digital cash registers, cultivation monitoring systems, signage, etc.) to communicate with Baker’s system.

To deliver more robust services and reach a wider market — the company serves about 1,000 dispensaries today — Baker acquired its largest CRM competitor, Grassworks Media, in late 2017.

“My vision: Roll up the tech industry,” said Milton, who previously founded a company called InfoHubs that wanted to develop a network of touch screens installed across New York City, connecting consumers and businesses.

To achieve its vision, Baker needed money. And although the company has raised $11.5 million to-date, finding funds is a challenge for a company providing services to suppliers of a federally illicit substance in fractured state-legal markets.

A publicly traded Tilt could allow for extra capital to flow toward acquisitions of other technology firms, said Milton, who is slated to continue as the company’s president overseeing the technology business.

Baker’s 67-person operation, which includes nearly 60 people in a newly renovated downtown Denver office, is expected to grow, he said.

“The time is now, and we see a massive opportunity in the market,” he said. “And we want to move quickly.”

Pending shareholder and regulatory approvals, the merger could wrap up by mid-June. Tilt is expected to maintain offices in Boston, Denver and Toronto.

By: Alicia Wallace, Denver Post

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