EXCLUSIVE: Tilray Brands CFO Talks Cannabis Legalization & Building a Diverse Roster of 'Lifestyle CPG Brands'

Carl Merton is Chief Financial Officer at Tilray Brands TLRY, a global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America. Merton recently took retail investor questions about Tilray Brands’ Q2 earnings, business priorities, and legalization progress via the Public.com investing platform. Here’s an exclusive recap of the Town Hall event for Benzinga readers.

What were some of the key takeaways from Tilray Brands’ Q2 earnings?

Carl Merton: In Q2FY23, we achieved strong operating and free cash flow and 15 consecutive quarters of positive adjusted EBITDA.  We are in a strong financial position with $433.5 million in cash and marketable securities. 

We maintained our leading cannabis market share position with #1 market share in recreational cannabis across Canada and leading medical cannabis market share across Europe. Beverage-alcohol sales increased 56% year over year. Gross profit increased 22% year over year. Tilray Brands is building the world’s leading and most diversified cannabis lifestyle consumer packaged goods company and also recently completed the acquisition of Montauk Brewing Company further diversifying our business.

In your Q2 earnings, Tilray Brands was positioned as a ‘lifestyle consumer packaged goods company,’ Can you articulate what you mean by that?

CM: Tilray Brands has the strategy in place to create the world’s leading and most diversified cannabis lifestyle consumer packaged goods company in the world across adult-use and medical cannabis, beverage-alcohol, and wellness consumer products. Our unprecedented production platforms in the U.S., Canada and Europe support over 20 brands in over 20 countries.  We invested in leading and profitable cannabis-adjacent CPG lifestyle brands across craft beverage-alcohol and wellness that resonate powerfully with consumers and are ideally positioned in key markets.

What is your timeline on becoming profitable?

CM: We have been adjusted EBITDA positive for 15 quarters which is a significant achievement and something no other cannabis company can claim.  Tilray’s solid financial performance is a sign of our strong operational and financial discipline which will enable us to deliver on our highest priority: delivering sustained, durable shareholder value.

What would you say to long-term shareholders who are perhaps concerned about stifled cannabis legalization here in the U.S.?

CM: Tilray Brands is pursuing our most profitable core businesses to drive growth now and over the long term and we have long viewed generating free cash flow as integral to our business model enabling us to deliver on our highest priority which is delivering sustained, durable shareholder value. We have a strong balance sheet with over $400 million of cash and marketable securities and a strong management team that knows how to execute. With delayed federal cannabis legalization in the U.S., we will continue to grow our international and U.S. brands and businesses and focus on expansion opportunities. We have #1 market share in the recreational cannabis market across Canada, leading medical cannabis market share in Europe, #1 hemp foods brand with Manitoba Harvest, the #10 craft-beer brand across the U.S. with SweetWater and the fastest growing and #1 craft-beer brand in Metro New York with Montauk Brewing Co. and we plan to expand our U.S. CPG portfolio with accretive acquisitions. When federal cannabis legalization does occur in the U.S., we will leverage our U.S. brands and businesses, including a broad set of cannabis-lifestyle CPG brands, and their distribution and marketing network to enter markets and capture opportunities.

How does Tilray plan to compete with other cannabis startups and competitors? What do you have that will make you the ‘top’ brand or company?

CM: We plan to compete by leveraging the strength of our balance sheet and brands. We are also continuing to work on new product innovation to stay ahead of the curve and offer unique products that set us apart from our competitors. We believe that our strong financial position and commitment to innovation will continue to hold Tilray as a top, brand-focused company in the cannabis industry.

How does Tilray Brands plan to improve access to cannabis for the average American consumer? Will you push to deschedule and legalize cannabis on a federal level in the US?

CM: In the U.S., participation in the adult-use cannabis market has always been very important to us and integral to our long-term strategy.  We will continue to advocate for federal cannabis legalization in the U.S. and across international markets and we are actively working with regulators on cannabis regulation to help in creating a safe and regulated market for the industry.

How do you see the whole cannabis market moving towards the future?

CM: The cannabis market is moving towards consolidation in the future, with a stronger focus on economies of scale and efficiency.

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Public.com members can view the full Q&A in the app. Open To The Public Investing is a member of FINRA and SIPC. This content is not investment advice. Investing involves risk of loss.