Once a leading marijuana stock, the Canadian cannabis company has pivoted to craft beer and is trying to prevent being delisted on the Nasdaq. Inside the move from buds to suds.
In July 2018, Tilray, the Canadian-based cannabis company, went public on the Nasdaq, becoming one of the first weed firms to list on a big U.S. exchange. On its first day of trading, shares jumped 35% and Tilray became the first beloved pot stock.
A few months later, Tilray hit $214 per share, valuing the startup—which had $27.5 million in revenue at the time—at $17 billion, an all-time high. But shares have been in a painful decline ever since. After seven years of no meaningful movement at the federal level to legalize marijuana in America and brutal competition in Canada’s small cannabis market, Tilray’s stock price has now dropped below $1, recently trading at 49 cents. Last month, the Nasdaq sent the company a warning that it could be delisted.
Irwin Simon, who became CEO of Tilray in 2021 after the company merged with another Canadian cannabis company Aphria, which he was CEO of at the time, is well aware that his company’s stock price is in the toilet—and he believes he has a plan to fix it. Simon, who oversaw Tilray’s acquisition of more than a dozen craft beer and spirits brands over the last few years, says he is “not nervous” about getting delisted because he expects shareholders to approve a reverse stock split in July, which would bring the share price over a $1 again.
“We’ve got great brands, great businesses, a good balance sheet, a real good organization, but yeah, I got a shitty stock price,” Simon says while sitting in his corner office in Midtown Manhattan. “The good news is that there’s optionality. And we’re certainly not the ugliest cannabis company, certainly not the ugliest beer company out there. I’m trying to figure out, with the strategy we have in place, what other opportunities there for us.”
Simon, who founded Hain Celestial Group in 1993, an organic food company he took public and grew into a $3 billion (annual sales) business, oversaw the merger of Aphria and Tilray four years ago. The deal, which valued the combined company at nearly $4 billion,was structured as a reverse acquisition of Tilray—each Aphria shareholder received approximately 0.8 Tilray shares, worth $6.20 at the time, for each Aphria share they owned.
Despite its market woes, Tilray remains one of the biggest cannabis producers in the world, growing about 170 metric tons of marijuana each year, which is sold across 20 countries from Canada to Europe to Australia. (It cannot sell marijuana in the U.S. due to federal law.). After acquiring eight craft beer companies from Anheuser-Busch and four from Molson Coors, it is also now the fourth largest craft brewer in the U.S. with regional brands that include New York’s Montauk Brewing, Georgia’s SweetWater and Colorado’s Breckenridge Brewery. (Tilray also owns Colorado-based blended bourbon whiskey maker Breckenridge Distillery.) Overall revenues were $788 million last year but Tilray somehow managed to lose $222 million. Although the company is losing heaps of money, it has $230 million in cash and has trimmed its losses from a staggering $1.4 billion in 2023.
Thanks to Simon’s string of acquisitions, a strategy he says is due to his fear of being a “one-trick pony,” Tilray is no longer just a cannabis company. He cringes at the word “weed” and points to Tilray’s $80 million (annual sales) medical marijuana business. (Tilray sells a total of $275 million of cannabis when recreational sales in included.) He wants investors to believe that the brand, which derives 60% of its revenue from selling cannabis and beer, is really a diversified pharmaceutical and consumer packaged goods company with a focus on “bringing people together for a good time.”
Last year, 35% Tilray’s revenue came from marijuana while 25% came from its alcohol division. Tilray also operates a pharmaceutical distribution business in Europe, which delivers its medical cannabis as well as other medications to pharmacies and is responsible for 33% of its revenue. The company’s wellness division features hemp-based food brands like Manitoba Harvest and brings in about 7% of the company’s revenue.
The company has suffered in part because the Canadian cannabis market is small—$4 billion in annual sales, tiny compared to the $32 billion legal market in the U.S.—and is saturated with competitors and hampered by high taxes. Tilray is the biggest operator in Canada by revenue, but it only has an about 10% market share. With too many companies producing too much cannabis, prices have cratered and margins have been vaporized. Another factor is that federal cannabis reform has stalled in the U.S., which for Tilray and other Canadian operators has been devastating. The plan has always been to expand into the U.S. market, but it can’t until the federal government changes the marijuana laws.
“I can’t sell [cannabis] in the U.S. market today, and that bothers the hell out of me,” says Simon.
While it is easy to write off Tilray as a bad company, some industry insiders believe it could in a good position to ride out the challenges of the Canadian market. After all, it has about $230 million in cash on its balance sheet.
Kristoffer Inton, an analyst from Morningstar who covers Tilray, says the company is the best positioned operator in Canada. He says it is “undervalued” but “very risky.”
“To call them a bad company isn’t truly accurate,” says Inton. “They’re just in a market where nobody makes money.”
Another issue weighing down the stock price is that the majority of Tilray’s shareholders, like any other cannabis company, lacks institutional investors. About 75% of Tilray’s shares are owned by retail investors, meaning the company does not have the stability of big shareholders who can help anchor a company’s stock price.
Tilray is not alone. Pot stocks are out of vogue. MSOS, the industry’s biggest ETF, is down 88% from 2020. Inton says that retail investors trade on sentiment, and the sentiment around cannabis is “quite negative now.”
“I think right now [being a cannabis company] hurts me,” Simon says.
Pivoting to alcohol has helped diversify Tilray’s revenue, but ironically legal weed has been hurting beer sales in the U.S. According to the Brewers Association, craft beer production decreased 4% in 2024 over the prior year, the third consecutive decline as consumer preferences continue to change.
“Cannabis does ultimately cannibalize alcohol sales,” Simon concedes. “If I get cannibalized on one end, I want to be in the business that’s cannibalizing.”
To that end, he believes that Tilray’s beverage business can expand through its intoxicating hemp-derived THC drink brands Happy Flower, Herb & Bloom and Fizzy Jane’s. Thanks to hemp products being federally legal through the 2018 Farm Bill, Tilray sells its hemp beverages across 13 states in the U.S., with its biggest markets in Minnesota, Florida and Texas. Tilray launched hemp drinks in the U.S. last year and has yet to report revenue from this division.And THC-infused beverages, which are about 2% of the industry but growing rapidly, is a line of business that Simon is excited about.
“These hemp drinks are very big,” Simon says, while cracking open a can of Liquid Love, a Tilray brand of sparkling water. “They’re the next alcoholic seltzer. If I could sell it in 50 states, it would be a billion-dollar business for Tilray tomorrow.”
Simon’s diversification strategy, however, will take time to reverse its fortunes. Its revenue dipped 1% last quarter compared to the same time period in 2024, and the company lowered its full-year net revenue guidance to $850 million to $900 million down from $950 million to $1 billion.
But Simon looks at Big Tobacco stocks for inspiration. Philip Morris International, which owns Zyn, the nicotine pouch juggernaut, through its subsidiary Swedish Match, has seen its stock price grow 234% since 2008. And considering that marijuana is not responsible for 480,000 American deaths each year like cigarettes, Simon believes Tilray’s stock could do even better.
“I’m building something different,” says Simon. “There is no company out there today that has cannabis, spirits, beer and hemp foods, so I’m either real smart or real dumb, you know?”
