Tilray CEO is optimistic about cannabis legalization after the election

Diving certificate:

• Tilray CEO and Chairman Irwin D. Simon told investors the company is optimistic that there is “a greater likelihood” that the U.S. presidential election will lead to changes in cannabis regulation, given both major party candidates’ support expressed support for a reclassification of the drug.
• Through its new Tilray Alternative Beverages unit, the company is launching four hemp-derived THC beverages in key U.S. markets this month.
• Cannabis beverage makers are optimistic that the political situation in the US will turn in their favor after the election.

Insight into the dive:

For the first time in the USA, both candidates from the major parties are open to legalizing cannabis products.

During an appearance on the sports podcast “All The Smoke” last month, Vice President Kamala Harris said she believes cannabis should be legalized. Last year, the Biden administration expressed interest in reclassifying cannabis to Schedule III, the same classification as drugs like ketamine.

Former President Donald Trump said in a statement on his Truth Social platform last month that he supports a change in Florida law that would legalize recreational cannabis for adults 21 and older. That marked a break with many other Republicans who want to restrict the drug, including his former primary opponent, state Gov. Ron DeSantis.

Tilray noted that net sales rose 13% year-over-year in its most recent quarter, a sign that the company is growing. TD Cowen analyst Robert Moskow said in a note that the company’s financial performance was less rosy than portrayed as sales of its Canadian cannabis business fell over the summer.

But Moskow says Tilray is making progress in expanding distribution of the beer brands it recently purchased. Last year, the brand acquired eight beer brands from Anheuser-Busch, including Shock Top, and in August it bought four more craft beers from Molson Coors.

In his conference call Thursday, Simon said Tilray has managed its finances better than other cannabis companies and paid off more than $300 million in debt in the most recent quarter. When asked by an investor whether the company would be interested in partnering with a distributor to help it scale its products in the U.S., the CEO left both options open.

“We are willing to go it alone in the U.S., depending on the guidelines and parameters,” Simon said. “On the other hand, given our balance sheet today, we have the opportunity to attract a great strategic partner who can help us.”

Tilray’s recently launched drinks are fortified with 5 milligram of hemp delta-9 THC, which are easier to sell in states where the drug remains illegal. These include 420 Fizz and Fizzy Jane’s Seltzer in Lemon Lime and Blood Orange flavors; and Herb & Bloom and Happy Flower mocktails in varieties like Margarita and Peach Bellini. The drinks will compete with other hemp-infused RTD beverages, including Nowadays’ low-dose drinks and Jones Soda’s Mary Jones.