Is Tilray becoming a beer company?

DEALS
Tilray is turning into a beer company?

What happened: Canadian company Tilray said earlier this week that it will acquire four craft breweries from Molson Coors, including Hop Valley Brewing Company, Terrapin Beer Co., Revolver Brewing, and Atwater Brewery.

Financial terms of the transaction weren’t disclosed. 

Why it matters: The latest acquisition is yet another sign that Tilray is as much an alcohol and beverage company as it is a cannabis company. 

Since Irwin Simon took over the firm, it purchased SweetWater Brewing in 2020 and bought $85 million worth of beer and beverage brands from AB In-Bev last year. 

Let’s take a look at the company’s latest earnings:

• This past quarter, Tilray’s beverage/alcohol business accounted for 33% of the company’s revenue. That’s up from 18% the same quarter the year prior. 

• And, the company’s cannabis business accounted for 31% of revenue this past quarter — down from 35% the year prior.

So, the trajectory is clear. Tilray wants to be a house of craft beer and liquor brands as much as it wants to be a house of cannabis brands.

What they’re saying: “Tilray Brands plans to continue to invest in the future of these craft breweries, accelerating their growth and capturing a wide range of new market opportunities. Tilray Brands is a beacon for craft brands, and we are committed to driving their growth and success within our portfolio,” said Simon. 

The company describes itself like this. It’s at the nexus of cannabis, beverage, and wellness:

Our take: It’s sort of like the LVMH model, but for intoxicating substances. 

I’m not confident enough yet in Tilray’s business to say this is the path that every big, publicly traded cannabis company will take. Constellation Brands — the maker of Corona and other popular beers — famously wrote down its investment in Tilray competitor Canopy Growth to the tune of $1.1 billion (!) in 2022. 

But, as profits from cannabis remain elusive (unless you are Green Thumb Industries, apparently) thanks to heavy regulation, falling wholesale prices, and the slow progress of legalization in the US, we expect more companies to look to diversify into more sure bets like beer. Think complementary spaces like alcohol, snacks, or whatever it may be. 

And more: It’s interesting to see an uptick in cannabis industry deals lately. Earlier this week, SNDL said it would acquire the rest of Nova Cannabis for $40 million. In July, Verano bought assets from The Cannabist for $105 million.

-JB

“How ridiculous is this, that we would let our Constitution basically be rent-seeking for some Canadian marijuana company,” Florida Gov. Ron DeSantis said of Amendment 3, the state’s November ballot initiative to legalize cannabis. 

Though DeSantis is known for his slippery relationship with the truth, he does have a small point — Trulieve, the biggest backer of the legalization campaign, is listed on the Canadian Securities Exchange because companies that sell cannabis in the US are barred from the Nasdaq and the New York Stock Exchange.

However, Trulieve, and CEO Kim Rivers, are most definitely based in Florida (famously so). 

Polls indicate that Amendment 3 has strong support — 63% in one recent poll, and 56% in another, though the ballot measure has to cross a supermajority of 60% to pass. 

• Glass House Brands posted a $10 million profit on $54 million of revenue, up 21% year-over-year. The company said on the earnings call it is looking to grow “hemp-derived” cannabis to export across the country. 

• 4Front reported a $4.8 million net loss on $18.6 million of revenue. 

• Gold Flora reported a $24 million loss on $31.6 million of revenue. 

• Safe Harbor Financial reported just under $1 million of net income on $4 million of revenue.

Ed note: We’ve updated Glass House Brands to report the correct profit.

Florida weed 🦩
Legalizing cannabis in Florida would add between $195.6 and $431.3 million to state tax coffers, economists say. And 2.4 million tourists would purchase cannabis on their vacation to the Sunshine State, per projections. 

GOP obstinance 🌿
Republican Sen. Chuck Grassley sent a letter to Attorney General Merrick Garland and the Department of Health and Human Services accusing the Justice Department of bypassing “traditional safeguards” in the push to reclassify cannabis as a less dangerous drug. The comment period on rescheduling closed last month, though we’re still waiting on official word. 

California regulators seize products 👀
State officials in California seized more than 2.2 million pieces of fraudulent or forged cannabis packaging materials they say were used to circumvent regulations, KTLA reports.

More turmoil in Massachusetts: The state Cannabis Control Commission’s acting chair, Ava Callender Concepcion, will take medical leave. Earlier this week, the CCC’s director of licensing, Kyle Potvin, and director of testing, James Kocis, left their jobs.

Eighty-six percent of professional drug researchers say they’ve used drugs in the past according to a new study and possibly to no one’s surprise. In scholarly speak, they’re PWUDs or People Who Use Drugs.

The University of Minnesota is launching a Cannabis Research Center to “provide, interpret, and disseminate research information to guide policy and practice related to cannabis use in Minnesota.”

The Joint Session podcast with former New York Office of Cannabis Management employees is well worth your time. Listen to it here. 

Why is recreational marijuana more expensive in Ohio than in Michigan? We ask the experts | WCPO