Is Tilray Brands moving beyond weed?

 



With its recent and indeed ongoing acquisition spree, expansion into adjacent markets and recent name change, Tilray Brands are clearly looking to ascend to a dominant player in the legalized weed market as it looks to become the P&G of hemp. However, with recent Acquistion of distilleries and craft beer operations, it signals the cannabis producer ambition to become a major player in the CPG industry writ large. 


With its statement $4bn merger of now former rival Aphria, Tilray made a clear beeline to become a dominate force in the legalized cannabis market and in one fell swoop became the biggest cannabis producer Iin the world according to global footprint 


Along with that acquisition, Tilray sought to change its name from Tilray to the not so original Tilray brands. You might not think there’s much in name but for companies the name is everything. Most of the time, companies change name to either to signal a new direction of the company or to (more often than you think) rebrand but for Tilray this renaming is a clear signal of its intention to become not just the P&G of hemp but P&G full stop. While committed to the legalized cannabis market, Tilray in clearly exhausted by its efforts to dominate a market that while legal is made irreducibly complex by lawmakers of local regulators particularly in the US (the biggest cannabis market) where most states have either legalized or decriminalized weed yet remains a schedule 1 narcotic along with cocaine and heroin at the federal level. 


Nonetheless, Tilray’s bid for market dominance runs through the US. The company signifies that despite their frustrations, they remain undeterred with its recent acquisition of Med Men’s debt which provides a runway to eventually acquire the company outright. What interest us most is growing portfolio of beverage acquisitions which the company positions as an adjacent business that feeds into the company long term cannabis ambitions the food and beverage market is considerably larger than market for cannabis ever be. 


From our view, it seems unlikely that cannabis would become legal at federal level anytime soon, particularly within the company ow sated timeline of two years. Tilray noted its intention to use synergies between its Breckenridge and sweet water brands to produce and sell cannabis infused product but in our view, Tilray may seek to satisfy what is a much larger market than the one they currently serve. 


The only thing that could bring Tilray expansion ambition the rate at which the company has dilute its shareholders to fund its losses. So far, it’s affected Tilray stock price as but that’s expected as the company grows. Tilray at the time of writing has strong a strong balance with little debt with debt-to-equity ratio of 0.16 but if the company plans to scale, it’s debt to equity will see an uptick to say the least as its diluted to the gills shareholders will at some point call uncle. 


In sum, Tilray has serious ambitions to dominate the weed and through smart acquisitions and partnerships, has taken meaningful steps towards them. However, with the legal hold ups in its biggest markets, Tilray Brands may end being becoming A major CPG player P&G may have to worry about down the line.  

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