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)

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

Victoria Police Department looks to identify a person of interest after a Friday night stabbing. (VicPD handout)
Police seek person of interest after Victoria stabbing

Friday night assault leaves one with potentially life-altering injuries

Daniel Foster, last seen in downtown Parksville on Saturday, May 1. (submitted photo)
RCMP seek help locating missing Victoria man, last spotted in Parksville

Daniel Foster, 43, seen via surveillance camera using an ATM

Police stopped, then let go this man and his large collection of cans during a stop Monday morning on Resthaven Drive. Police had received a report of a possible theft, but let him go after he had returned the property, which he believed was his to take after being left out in public. (Wolf Depner/News Staff)
Report of theft, balancing act on Sidney street draws curious onlookers

Incident happened just before 8:30 a.m. opposite of Vancouver Island Regional Library branch

Sean Hart, 34, unexpectedly left the Seven Oaks Tertiary Mental Health Facility in Saanich on Nov. 6, 2020 and has now been missing for six months. (Photo courtesy Penny Hart)
Search continues for Saanich man Sean Hart six months after his disappearance

Support from community, police keeps his mother hopeful

Victoria Police continue to investigate a stabbing in downtown Victoria. (Black Press Media file photo)
Passerby calls police after finding man stabbed, sobbing on Victoria street

One man was sent to hospital with non-life-threatening injuries

A bullet hole is seen in the windshield of an RCMP vehicle approximately 4 km from Vancouver International Airport after a one person was killed during a shooting outside the international departures terminal at the airport, in Richmond, B.C., Sunday, May 9, 2021. THE CANADIAN PRESS/Darryl Dyck
Homicide team IDs man in fatal YVR shooting as police grapple with spate of gang violence

Man, 20, charged in separate fatal shooting Burnaby over the weekend

Vancouver Canucks goaltender Thatcher Demko (35) makes a save on Winnipeg Jets’ Nate Thompson (11) during second period NHL action in Winnipeg, Monday, May 10, 2021. THE CANADIAN PRESS/Fred Greenslade
Vancouver Canucks see NHL playoff hopes dashed despite 3-1 win over Winnipeg

Montreal Canadiens earn final North Division post-season spot

The B.C. legislature went from 85 seats to 87 before the 2017 election, causing a reorganization with curved rows and new desks squeezed in at the back. The next electoral boundary review could see another six seats added. (Black Press files)
B.C. election law could add six seats, remove rural protection

North, Kootenays could lose seats as cities gain more

The Independent Investigations Office of B.C. is investigating the shooting of an Indigenous woman in the Ucluelet First Nation community of Hitacu. (Black Press Media file photo)
B.C. First Nation wants ‘massive change’ after its 3rd police shooting in less than a year

Nuu-chah-nulth woman recovering from gunshot wounds in weekend incident near Ucluelet

Nurse Gurinder Rai, left, administers the Moderna COVID-19 vaccine to Maria Yule at a Fraser Health drive-thru vaccination site, in Coquitlam, B.C., on Wednesday, May 5, 2021. The site is open for vaccinations 11 hours per day to those who have pre-booked an appointment. THE CANADIAN PRESS/Darryl Dyck
COVID vaccine bookings to open for adults 40+, or 18+ in hotspots, across B.C.

Only people who have registered will get their alert to book

Dr. Victoria Lee, CEO of Fraser Health, hosts an update on efforts to contain B.C.’s COVID-19 transmission in Surrey and the Fraser Valley and protect hospitals in the Lower Mainland, May 6, 2021. (B.C. government video)
B.C.’s COVID-19 infection rate slowing, 20 more people die

Deaths include two people in their 40s, two in their 50s

The Canadian Forces Snowbirds are in the Comox Valley for their annual spring training. Photo by Erin Haluschak
Suspected bird strike on Snowbirds plane during training in Comox

Pilot followed protocols and landed the aircraft on the ground without any problems

Most Read