The Tinley Beverage Company Inc. has entered into a management services agreement with Blaze Life Holdings, LLC that will result in Tinley’s relocating its bottling assets to Blaze Life’s 45,000 sq. ft. cannabis manufacturing and distribution facility in Canoga Park, California.
Blaze Life and its licensed subsidiaries will provide Tinley's with management and operational services, expected to result in operating cost savings of approximately $1 million per year.
"Since we began our collaborative partnership with Blaze Life Holdings in June 2022, we've successfully delivered cost reductions and increased our operating capacity,” said Tinley’s CEO Teddy Zittell. “When production begins at the Canoga Park facility, we expect efficiencies to accelerate, with additional benefits anticipated from the on-site capacity for inventory storage and integrated first-mile and last-mile distribution services provided by SuLo Distro, a subsidiary of Blaze Life Holdings.”
Tinley’s will decommission and vacate its manufacturing facility in Long Beach, California. The company plans to move its bottling assets to the Canoga Park facility during the latter half of Q2 2023 and expects to be fully operational by mid to late Q3 2023.
During the transition — which is expected to take approximately 30 to 45 days to complete — Tinley's will not provide co-packing bottling services to its customers. Tinley's intends to increase bottling production during Q1 and Q2 2023 to fulfill planned production and compensate for bottling line outages over the course of the move.
"As a result of the anticipated increase in production activity, we expect revenue to be higher than previously anticipated in Q1 and Q2 of 2023,” Zittell said. "This increase is over and above the quarter-on-quarter revenue growth we previously expected in 2023. We have seen material revenue gains in the first three quarters of 2022, and our 2022 year-end financial results are expected to show increased revenue in Q4 2022. We have no reason to believe that this trend will not continue through 2023.”
Until the Canoga Park facility is fully operational, Tinley's will continue to produce cans at the company's Long Beach facility for current co-pack customers, as well as for new customers introduced to Tinley's by Blaze Life. Tinley's Long Beach can line will remain in production during the move of the company's bottling assets and will continue to generate revenue until the company fully exits the Long Beach facility. Following the move to the Canoga Park facility, Blaze Life will produce beverages in cans for Tinley's existing can customers.
Tinley's has agreed to pay Blaze Life a flat fee of $55,000 per month, as well as a $70,000 annual fee for accounting and administrative services. Blaze Life has agreed to pay Tinley's certain referral fees for a period of two years based on revenue received in connection with co-packing canning services provided to Tinley's existing clients transferring production to Blaze Life. Tinley's will continue to receive 100% of the revenue generated from the use of its bottling assets at the Canoga Park facility.
This article was originally posted on www.cannabisproductsinsider.com
