Tilray potential? – Cannabis | weed | marijuana

What potential does Tilray have in the global cannabis market? The company’s stock skyrocketed with its recent acquisition of eight beer and beverage brands from Anheuser-Busch InBev.

But how much of Tilray’s potential is real growth versus hype? We’ve already seen great predictions from licensed cannabis producers.

For example, Canopy is trading 99% below its all-time high. And remember when Aurora said they would supply a third of all Canadian cannabis?

But what about Tilray? Does Tilray have the potential to succeed where other LPs have failed?

CLN spoke to Jason Wilson, cannabis research and banking expert at ETF Managers Group (ETFMG), about the ETFMG Alternative Harvest ETF, MJ, to provide some insight into Tilray’s potential.

Tilray Potential as a CPG Company

According to Jason, Tilray’s beer acquisition is part of their strategy to become a cannabis-focused CPG company.

CPG stands for Consumer Packaged Goods. CPG companies typically produce large-scale, short-lived goods that they then sell to retailers.

“Tilray took this asset-light approach a while ago and started focusing on how to maintain a sustainable business rather than having to rely on legalization in the US and other jurisdictions around the world,” says Jason.

“And even in Canada they’re really focused on ‘what can we do now’, ‘how can we build our brand’, ‘how can we build our distribution now’ and make money from it. They have done the best job by far of any global cannabis producer.”

Tilray’s potential comes from the way the company is expanding beyond cannabis. They are now focused on pharmaceutical distribution in Europe, alcohol in the US and wellness products worldwide.

These are not just any companies in which one can invest. Tilray’s potential lies in distribution.

Says Jason

If you look at the US market and what’s going on right now, it makes a lot of regulatory sense to go into the craft beer space, get into the distiller space and build these brands where you’re likely to have significant distribution synergies if THC -based products to become legal nationwide. And that should give them a pretty significant advantage.

Tilray potential thanks to CEO

Jason credits Tilray’s potential to Irwin Simon, the company’s chairman, president and CEO.

“To sit there and be the CEO of a company and say, ‘Hey, I have to plan my entire business around something that I have no control over.’ He didn’t seem particularly interested in it,” says Jason.

Indeed, in a letter to shareholders, Simon wrote that Tilray would become a leading US CPG company. This vision would allow them to use their infrastructure when legalization occurs at the federal level. This allows Tilray to get its products to stores immediately.

“In Europe,” says Jason, “it’s very similar. Instead of focusing on the alcohol segment, they’re looking more at the medical side of things.”

Is the non-profit approach to German legalization a disadvantage? “No problem at all for Tilray,” says Jason.

He attributes Tilray’s potential in Europe to its pharmaceutical distribution business. “They see Germany as a business opportunity in the medical field,” he says.

They have processing there. They have distribution networks there. And even if the legalization of leisure activities has been withdrawn, that could of course come later. But they won’t base their whole European business plan on later things, but will look at what they could do now on the medical side.

What about others?

Tilray’s potential as a CPG company rests on its American and European infrastructure. When legalization comes, they can open up another profitable distribution network.

Why don’t other manufacturers follow suit?

Canopy has a relationship with Constellation Brands. But last year, Constellation announced plans to convert its common shares into exchangeable shares to “eliminate the impact on our equity on earnings, de-risk our organization, and further reaffirm our intent not to make additional investments in Canopy. “

Likewise, Aurora Cannabis isn’t poised to expand like Tilray. They’ve already embarked on an acquisition spending spree, and it’s ending badly.

As for US-based cannabis operators? “It’s a lot harder,” says Jason.

Their earnings are great, but it’s difficult for them to continue like this. So I think expanding into different companies like Tilray would be an incredible challenge for them. Anything they do would be tainted with the illegal cannabis aspect, banking and everything else, if you will.

Jason suggests keeping their focus on making money while they wait for regulatory changes. Meanwhile, Tilray’s potential continues to outperform its Canadian peers and future US-based competitors.