Tilray and Aphria’s merger arguably created the world’s largest cannabis company. The two Canadian marijuana giants joined forces in May – operating under Tilray’s name – and now have an empire that extends around the globe.
Tilray is licensed to cultivate, sell and import-export marijuana and CBD products in more than twenty countries, including some of the world’s most valuable markets. Aside from selling more recreational weed in Canada than anyone else, Tilray is the largest medical cannabis company in Europe and the first to get the green light to export CBD products to China and Australia.
But so far, in the US, Tilray has limited itself to selling CBD products and has no immediate plans to enter either the recreational or medical cannabis market. Yet nearly half of the US population now lives in a jurisdiction where adult-use marijuana is legal, with more states set to follow. What’s stopping Tilray from adding its considerable weight to America’s growing marijuana industry?
For Tilray’s chairman and CEO, Irwin Simon, he first wants to see action at the federal level on cannabis legalization before jumping in headfirst. While most agree that federal cannabis reform is inevitable, and likely within a matter of years, how this will happen and what regulations will be in place is anybody’s guess. Will states compete with one another in an open market? Will they put up tariffs to support local businesses? What will the tax arrangements be, at both federal and state level? Will marijuana businesses be able to vertically integrate?
“A lot of the US multi-state operators are sort of saying, ‘Let’s spend all this money now on growth,’ but if later regulations say they can’t be a grower or they can’t be a retailer, their model doesn’t work anymore,” he said. “We don’t know what’s the model that legalization will follow, once it happens.”
There are simply too many unknowns for Tilray to go all in. For now. And given the company’s size and standing, Simon believes Tilray can afford to wait. The company is well-positioned to move when more becomes clear.
“Having all these businesses prepares us to enter the United States,” said Simon. “We have the ability to enter it. We know how to grow and market brands, we know how to package products from a regulatory standpoint. That gives us the ability to enter the US market once legalization happens.”
Simon’s caution is in contrast to one of Tilray’s likely biggest US competitors. Massachusetts-based Curaleaf, which was the world’s largest cannabis company until the Tilray-Aphria merger, has invested heavily in the US and raked in $625.6 million in revenue last year. It holds over a hundred business licenses across 23 states and has raised close to $300 million in capital this year for future expansion. Rather than go toe to toe, however, Simon believes Tilray can bide its time and play catch up when America’s cannabis industry takes on a more settled shape.
“It’s waiting to buy at the right time,” Simon said. “At the end of the day, if we have to pay more, I’d rather be sure and pay more for something that I know is right, rather than buy a lottery ticket and hope that ticket comes in at the right time.”