Tilray Signs Revenue Sharing Agreement With Authentic Brands Group For Cannabis Production, Distribution

Tilray Inc TLRY announced Tuesday it signed a global revenue sharing agreement with Authentic Brands Group for the development and marketing of cannabis.

What Happened

The deal, through which Tilray becomes Authentic Brands’ preferred cannabinoid supplier, involves a $100 million initial payment from Tilray with milestone-contingent additions up to $250 million in cash and stock.

From then on, Tilray will be entitled to up to 49 percent of Authentic Brands' net revenue from cannabis products. Depending on milestones, the firm claims a guaranteed minimum payment of up to $10 million annually for the next decade.

Why It’s Important

Through the partnership, Authentic Brands will distribute consumer cannabis products within its lifestyle and entertainment portfolio. Given Authentic Brands’ position in more than 100,000 points of sale globally, including 4,500 branded stores, the deal expands Tilray’s footprint. Among the retailers Authentic Brands lists among its partners are Kohl's, Macy's and Walmart.

Additionally, Tilray will tap into Authentic Brands' 250 million social media followers to drive growth and engagement.

"As we work to expand Tilray's global presence, this agreement leverages our complementary strengths and will be accretive to our shareholders as we reach new consumers across the entertainment, fashion, beauty, home and health and wellness sectors,” Tilray President and CEO Brendan Kennedy said in a press release.

What’s Next

The announcement did not include a development timeline, but specified that the partnership will immediately focus on U.S. and Canadian opportunities.

Tilray shares traded down more than 5.5 percent to $94.50 early Tuesday morning.

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