TLRY Stock: Is Tilray a Beer Company Now?

The Tilray share price has underperformed its competitors in 2024 as the indecision over US cannabis reclassification lingers. Nevertheless, the company’s focus on diversifying its revenue stream could be a long-term catalyst for TLRY stock; in its most recent quarter, beverage sales outweighed cannabis sales for the first time in its history.

Tilray Brands [TLRY] is a consumer-packaged goods company best known for its involvement in the research, cultivation, processing and distribution of cannabis for both lifestyle and medicinal purposes.

Founded in 2013 in Canada, the company has operations across North America, Europe, Australia and Latin America. It made its first move into the alcohol business in 2020.

This stock spotlight will discuss why the push into industries beyond cannabis is helping Tilray to stand out from its cannabis peers. While cannabis banking reform in the US would undoubtedly be a tailwind for TLRY stock, this analysis will also highlight the lack of progress on this front.

Tilray Grows Its Brewery Portfolio

On August 13, Tilray announced an expansion of its presence in the US beer market with the acquisition of four breweries from Molson Coors [TAP].

“We are confident in our ability to drive revenue, generate cost synergies, and expand national distribution, reinforcing our leadership position in craft beer resulting in tremendous growth opportunities for our global beverage business,” Tilray CEO Irwin Simon said in a press release. The deal is expected to help grow its alcohol customer base by 30%.

In October 2023, Tilraybecame the fifth-largest craft brewer in the US following the purchase of eight beer and beverage brands from Anheuser-Busch InBev [BUD] for $85m.

TLRY Stock Underperforms ACB and CRON

The Molson Coors news helped the Tilray share price to pop last week. TLRY stock is up 4.5% in the past month through 20 August, though down 18.7% since the start of 2024 and down 29.2% in the past year.

For comparison, the Aurora Cannabis [ACB] share price is up 33.2% since the start of 2024 and up 24.3% in the past year. The Cronos Group [CRON] share price is up 12.9% and up 26.9% in the respective periods.

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Tilray’s Total Sales Are Superior to Aurora and Cronos

While TLRY stock has performed disappointingly in 2024, the company’s Q4 results posted in July make for encouraging reading.

For the first time ever, its beverage alcohol segment brought in more revenue than its cannabis segment. Sales were $76.7m for the former, up 137% year-over-year, and $71.9m for the latter, up 12% year-over-year. Wellness revenue climbed 6% to $15.7m, but distribution revenue fell 10% to $65.6m. Overall revenue was up 25% from Q4 2023.

This “remarkable growth” was “driven by our successful execution of our diversification strategy,” said Simon in the earnings release. The company ended its Q4 with liquidity of approximately $260.5m, up from $226m in Q3 2024, which ended 29 February.

To highlight how important Tilray’s diversification is strengthening its sales, Aurora’s Q1 2025 revenue, which ended 30 June, was up 12% to $83.4m. Cronos’s Q2 2024 revenue, also ended 30 June, did jump 46% year-over-year, but only to $27.8m.

Source: Yahoo Finance

Tilray has the weakest projected growth over the next two fiscal years, but is fairly valued. And, if it can continue to diversify its revenue mix, then there should be plenty of room for further growth.

TLRY Stock: The Investment Case

The Bull Case for Tilray

Tilray is eyeing an expansion of its beverages business in the US by entering the THC-infused drinks market.

On the Q4 earnings call, the company said that the formulations for its delta-9 drinks were complete. Delta-9 is derived from hemp rather than cannabis, and, while not federally legal, each state has its own laws. Tilray is targeting New Jersey and Texas first, where delta-9 is legal provided hemp-derived products do not contain more than 0.3%.

Simon told BNN Bloomberg earlier this month that THC-infused drinks are a compelling opportunity for growth in the US — the company already has a 40% share of the Canadian market.

“And if rescheduling happened in the US tomorrow, and I could sell medical cannabis in the US with the growth facilities we have today … Just imagine what I could do in the US market,” Simon added.

The Bear Case for Tilray

Tilray does not derive any of its revenue from US cannabis operations. There is plenty of room to grow its presence in the US, but this will depend on changes to federal legislation.

There is unlikely to be any update on the reclassification of cannabis to a less harmful substance until after the election. Donald Trump indicated earlier this month that he would be in favor of decriminalization, but it remains to be seen whether he would actually loosen federal laws.

Kamala Harris, meanwhile, has suggested that she supports reclassification; however, even if Harris were to be elected the next US president and did legalize recreational cannabis use, there is the issue of banking reform. The SAFER Banking Act, which would make it easier for banks to do business with cannabis companies, is still awaiting a Senate floor vote.

Conclusion

Tilray’s lack of US operations means there is opportunity for growth should the federal law change. The company can lean on its experience in Canada’s medical cannabis industry.

Beyond cannabis sales, Tilray has been investing in breweries and craft beer and developing THC-infused drinks. The beverages portfolio and the company’s diverse revenue mix should be long-term catalysts for TLRY stock. However, it is important that investors conduct their own thorough research before coming to any investment decision.

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