Executives of the global cannabis firm Tilray were optimistic about the company’s growth regardless of federal legalization in the U.S., during Tilray’s first quarter 2022 earnings call Thursday.
Tilray reported a net revenue increase of 43% from $117 million to $168 million for the first quarter, ending August 31, 2021. It credited the growth to a 38% increase in net cannabis revenue to $70 million. It was the company’s tenth consecutive quarter for positive adjusted EBITDA.
Additionally, the company reported $15 million in net beverage alcohol revenue for the quarter following the acquisition of Atlanta, Georgia-based SweetWater Brewing Company late last year, and a wellness revenue of $15 million from the hemp foods company Manitoba Harvest, which Tilray acquired in 2019.
Irwin Simon, Tilray chairman and CEO, said the company still has a goal of becoming a $4 billion business in the next three years, regardless of federal cannabis legalization in the U.S.
“The Schumer bill came out with a lot of thunder, some lightning and I think everybody thought this was going to happen right away,” Simon said, referencing a draft legislation introduced in the Senate this summer that would decriminalize marijuana. “We’d love to see legalization, we want legalization in the U.S.
“If legalization doesn’t happen for 18 months, 24 months, we still have lots of runway out there to grow this business and to do acquisitions in adjacent areas, whether it’s spirits and alcohol, whether it’s hemp food and CBD,” he continued. “We will be around the hoop and we’ll be there when legalization happens.”
To reach its $4 billion goal, Tilray projects $1 billion in growth in Canada, $1 billion in European markets, and up $1.5 billion in the U.S.
“One of the biggest holdbacks in the U.S. will be growth,” Simon said. “We have the strains, we have the potency, we have the quality and the know how to be able to export that into the U.S. once legalization does happen.”
SweetWater To Expand Distribution and Offerings
In July, SweetWater announced its expansion west, including the acquisition of the former Red Truck brewery in Fort Collins Colorado, and a taproom at Denver International Airport. Simon said Tilray plans to continue expansion of the brewery to the West Coast.
Additionally, the company added 450 distribution points in Georgia for SweetWater in the quarter, via its partnership with Publix. SweetWater products are available in 40 states.
Although SweetWater generated $15.5 million in net revenue for the quarter, Simon said it was down “on a sequential basis,” and credited the reduction to a combination of a lower demand in the on-premise channel, and a decrease in off-premise consumption.
“We believe the impact of the delta variant affected consumer behavior both within restaurants and groceries alike,” Simon said. “Our beverage business, SweetWater, continues to experience a reduction in case demand for its on-premises channel, as well as restaurants operating below full capacity, coupled with a softer off-premises channel, all being experienced by other beer producers.”
While expanding SweetWater distribution, Tilray also plans to expand its beverage product lineup, including exploring new product categories such as hemp-based CBD drinks, ready-to-drink wine spritzers, wine in cans, and sodas. Simon also teased a tequila seltzer to launch through SweetWater’s Broken Coast line, as well as possible future THC beverages.
“We think there’s a big opportunity with SweetWater with THC,” Simon added. “I got out to visit stores [in Canada] yesterday and absolutely the demand for drinks in Canada is growing and there will be some type of THC product whether it’s SweetWater or not, but we think there is a big opportunity with SweetWater with THC.”