Shares of cannabis grower Tilray (NASDAQ:) (TSX:) are closed again on Monday. The stock of the New York City-based company has failed to reverse its downward course since the middle of last week.
On December 8, the stock moved slightly upward, reaching US$9.83, when the marijuana company, which also operates in Canada, announced it was purchasing a Colorado-based maker of bourbon whiskey and craft spirits.
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But that price increase didn't last as the stock closed for the week – lower than where it was before the acquisition was announced. Yesterday, the stock continued to fall, closing at $8.29.
Last Wednesday, Tilray announced what it called the 'strategic acquisition' of Breckenridge Distillery listed for $102.9 million in inventory. The rapid recovery of any immediate gains in TLRY's stock price reflects investors' potential disappointment that Tilray has chosen to invest in a non-cannabis company that will allow him to position himself for future growth rather than opting for more immediate positive returns. as the company continues to struggle to hit status.
Founded in 2008, Breckenridge is known for its award-winning bourbon whiskey. Annual sales are estimated at approximately $20 million.
Said Irwin Simon, CEO of Tilray:
“Tilray's strength lies in our ability to identify and significantly expand leading lifestyle brands (consumer packaged goods) that have a strong resonance with consumers. Breckenridge Distillery is an iconic addition to our platform in this regard, based on its portfolio of award-winning spirits, passionate consumer engagement and a strong sales and distribution network. ”
He added:
"More broadly, the Breckenridge Distillery transaction is consistent with Tilray's strategy to leverage our growing portfolio of US CPG brands to launch THC-based product proxies following federal legalization in the US. These significant, diversified revenue streams are essential to our ultimate goal of market leadership with $4 billion in revenue by the end of fiscal year 2024.”
The distiller enhances Tilray's beverage portfolio. The cannabis company already owns the SweetWater Brewing Company. This new purchase will also help Tilray roll out non-alcoholic, cannabis-infused spirits, including a whiskey-style drink, according to a statement from the company.
The strategy aims to capitalize on Tilray's position in the US market when the federal law legalizing cannabis is eventually passed in the US
Looking at 2022
Last week an analyst at Desjardins Capital Markets published a report on the 2022 outlook for the US and Canadian cannabis industries. The report, written by John Chu, predicts a 10% increase in marijuana sales. It also pointed to small producers on both sides of the border and described them as "best bets" for the coming year.
Chu said the larger Canadian cannabis companies will continue to pursue profitability without achieving this goal. On the positive side, the report shows that marijuana sales will continue to grow with demand.
According to the report, the drivers of continued strong sales in the industry include "continual improvement in the quality and/or potency of cannabis, more competitive pricing, and greater adoption of cannabis 2.0 products."
Final note: an interesting statistic
According to Statistics Canada, cannabis sales in Canada are about to surpass sales of domestic wines and spirits. However, it should be noted that when imported wines and spirits are included, liquor sales still exceed cannabis sales.
