B.C.- based Tilray to focus investments on U.S., Europe as Canadian assets “overpriced”

Tilray reported its latest earnings for the quarter

Brendan Kennedy, CEO and founder of British Columbia-based Tilray Inc., a major Canadian marijuana grower, poses before closing Nasdaq, where his company’s IPO (TLRY) opened, Thursday, July 19, 2018, in New York. (THE CANADIAN PRESS/AP/Bebeto Matthews)

Cannabis producer Tilray Inc. plans to focus the majority of its future investments on the U.S. and Europe, where the growth potential is highest, and will not purchase “overpriced supply assets” in Canada.

Tilray’s chief executive Brendan Kennedy said while Canada will continue to be an important market for the Nanaimo, B.C.-based company, the opportunities south of the border and across the pond are “orders of magnitude larger.

“We will not purchase or invest in what we believe to be overpriced supply assets in Canada, which we believe will erode in value in (the) medium- to long-term as the market normalizes… We believe that the field of battle has changed and that the U.S. and Europe are going to be more important over the long-term,” he told analysts on a conference call on Monday.

Kennedy made these comments as Tilray reported its latest earnings for the quarter ended Dec. 31, which included sales from recreational cannabis in Canada after legalization in October.

READ MORE: B.C. pot giant Tilray to acquire hemp food company Manitoba Harvest for up to $419 million

Tilray saw revenues surge by more than 200 per cent year-over year to US$15.5 million during the period. However, its net loss for the period also deepened to US$31 million or 33 US cents per share, compared to a net loss of US$3 million or four US cents per share a year earlier.

Analysts had estimated quarterly revenues of US$14.15 million and a net loss of US$10.43 million or 12 US cents per share, according to those surveyed by Thomson Reuters Eikon.

Tilray said that the increased net loss for the quarter was primarily due to the increase in operating expenses due to growth initiatives, expansion of international teams and costs related to financings and merger and acquisition activities.

The company’s average net selling price per gram rose to US$7.52, up from US$7.13 during the same quarter one year earlier.

For the full 2018 financial year, Tilray reported revenue of US$43 million, up 110 per cent from the previous year, and net loss of US$67.7 million compared to US$7.8 million in 2017.

“We achieved this growth despite supply-chain constraints across Canada that have created pricing pressure for cannabis that meets our quality standards, forcing us to source from other suppliers,” Kennedy told analysts on a conference call.

Since Canada legalized cannabis for adult use on Oct. 17, there have been product shortages which have, among other things, prompted some provincial government retailers to scale back on store hours or limit the number of stores.

Kennedy said during its earnings call in November it had been exploring buying wholesale to bridge the supply gap, but there was far less pot available and a lack of high quality supply on offer.

Tilray’s chief executive on Monday said he expected this situation to change in the coming months as more supply comes online.

“Over the next 18 months, we believe that we will be oversupply just as we have seen in certain U.S. states as operators in newly legal markets race and government regulators catch up to find an equilibrium between supply and demand.”

Meanwhile, although cannabis remains federally illegal in the U.S., Kennedy believes the U.S. farm bill passed late last year that opened the door to mainstream sales of hemp-derived CBD represents an “excellent opportunity.”

Last month, Tilray announced a deal to acquire Hemp Hearts-maker Manitoba Harvest for up to $419 million in cash and stock as the two companies look to launch CBD-infused products where permissible in the U.S. The recent resignation of the FDA commissioner is also going to help speed up the clarification of the agency’s stance on CBD, he added.

As well, he adds, “we are a lot closer to federal legalization in the U.S. than most people realize.”

Meanwhile, Tilray has recently expanded its partnership in Canada with pharmaceutical giant Sandoz globally, and expects to add another half dozen countries as export destinations in the wake of the European Parliament’s recent decision on medical cannabis.

“We are seeing rapid growth, not only in the number of countries but the number of patients within individual EU countries.”

Armina Ligaya, The Canadian Press

Like us on Facebook and follow us on Twitter

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Langley astronomy teacher hopes to answer questions about the universe at public presentation

Beyond the Stars runs 7 to 9 p.m. on Wednesday, Jan. 29, at Walnut Grove Secondary School

VIDEO: Langley woman without a home after houseboat sinks during snowy weather

A Go Fund Me page has been set up to help the Grant’s Landing resident replace her possessions

LETTER: Mall redevelopment about Aldergrove parking, too

Letter writer encourages Township council support for Janda Group’s new plans for old Aldergrove mall

Tax hikes possible in Township as budget talks begin

Just “keeping the lights on” could cost 4.12 per cent in tax increases

VIDEO: Nickelback gears up for nostalgia tour

Canadian band joins Stone Temple Pilots for a summer tour that includes just one stop in Canada

Boy, 13, arrested after alleged assault involving girl at B.C. middle school

Boy alleged to have used ‘inappropriate levels of force’ to injure the girl

B.C. player becomes only second Canadian to enter Hall of Fame of Baseball

Walker received 76.6 percent of the Baseball Writers of America Association vote

PHOTOS: Heavy snowfall breaks window, causing avalanche into B.C. newsroom office

It was a chaotic start to the week for the Kitimat Northern Sentinel

Deer carcass strung up at Surrey fire hall prompts investigation

Investigation underway following complaint a Surrey firefighter hung a deer carcass in a fire hall

Canadian law firm launches class action on behalf of Iran flight victims

Flight 752 was shot down by Iran shortly after take off

Mission Hill cellarman fired after mistakenly dumping $162K of wine down the drain

The former employee filed a grievance with the West Kelowna winery but was unsuccesful

Protesters block B.C. government building entrance to support Wet’suwet’en First Nation

A letter with four demands was delivered to the Ministry of Energy, Mines and Petroleum Resources

Most Read