Prediction: Tilray Brands Won't Be a Cannabis Company in 5 Years
It was almost four years ago that Tilray Brands (NASDAQ: TLRY) announced that it would be merging with low-cost cannabis producer Aphria to create a larger, more dynamic, and global marijuana company. At the time, it was an exciting prospect for investors, creating what might end up becoming the best cannabis stock to own.
But since that announcement back in December 2020, the stock has declined by more than 85%. There was a lot of hype around the news, and the stock skyrocketed shortly afterwards, but the enthusiasm would fade — significantly.
Are You Missing The Morning Scoop? Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
Over the next five years, I expect Tilray to continue to evolve its business — but this time, away from cannabis. It might still be a small part of its business, but I predict that Tilray won’t be known as a marijuana company for much longer.
For years, while Tilray has been patiently optimistic that the U.S. might legalize marijuana, which would result in a huge new growth opportunity for the Canadian-based company, it has been expanding its operations in other ways. It has expanded into international cannabis markets and has acquired alcohol brands.
Last month, the company reported its first-quarter earnings of fiscal 2025. For the period ending Aug. 31, its sales grew by 13% year over year to $200 million. But of that total, less than one-third (31%) of sales actually came from its cannabis operations.
The company generates more money from distributing pharmaceuticals overseas (34%) than it does from what it’s most known for: cannabis. And even its alcohol business now accounts for 28% of revenue, with wellness being its smallest segment, contributing 7% of total sales.
In the future, the company could become even more of an alcohol business than it is now. Tilray completed its acquisition of Atwater Brewery in September, a brand that it acquired from Molson Coors. It has more than a dozen beverage brands in its portfolio, including SweetWater Brewing and Breckenridge Brewery, which investors may be most familiar with. And it wouldn’t be surprising for the company to continue to go deeper into alcohol because that may be its best growth opportunity in the years ahead.
The strategy of waiting for the U.S. to legalize marijuana isn’t paying off for Canadian cannabis companies. And the recent election results in the U.S. may only exacerbate the need for the company to become even less dependent on cannabis in the future.
Leave a Reply