Analysts now predict Tilray Brands will fall well short of its revenue target of $4 billion (5.3 billion Canadian dollars) by 2024.
As a result, the company's management no longer guides for the target, Pablo Zuanic, managing director at Cantor Fitzgerald, wrote in a note to investors.
Tilray's target was undone by "delayed" legalization in the United States and Germany, as well as price compression, overproduction and slowing sales in Canada.
Leamington, Ontario- and New York-based company isn't the only cannabis company stumbling due to delays in legalization and U.S. reforms.
2023 will be a challenging year for the industry.
MJ Freeway's parent company, Colorado-based Akerna Corp., announced last week it was exiting the marijuana industry.
Curaleaf Holdings, a Massachusetts-based multistate operator, also announced it was exiting California, Oregon and Colorado last week.
Clever Leaves, a Colombian cannabis company, announced plans to leave Portugal.
The target is $4 billion
During a conference call with analysts in July 2021, Tilray CEO Irwin Simon first announced the $4 billion target.
Simon detailed his plan for achieving the $4 billion in annual revenue in a letter to Tilray shareholders on Aug. 26, 2021.
"This is the foundation that will enable us to reach our goal of 30% retail market share in Canada by fiscal year 2024 from our current combined retail market share of 16%."
As of now, Tilray controls roughly 8.3% of the Canadian recreational market, down by roughly 50% since then.
In an email to MJBizDaily, a spokesperson admitted that federal legalization in the United States and Germany did not go as planned.
According to the spokesperson, the $4 billion target was contingent upon federal legalization of cannabis in the U.S. - with a projected $100 billion market - as well as adult-use legalization in Germany.
Neither cannabis legalization nor the SAFE Banking Act, which would have protected financial institutions from federal punishment if they served regulated marijuana companies, were passed by U.S. lawmakers.
The German government, meanwhile, is already falling behind on its commitment to legalize cannabis.
The company recently reported a $61.6 million net loss for the quarter ended Nov. 30, bringing its six-month loss to $127.4 million.
There are complex societal, political, and economic forces at play, so executives should avoid latching onto optimistic scenarios involving federal legalization.
The company has not updated its revenue guidance for fiscal 2024, but its spokesperson said the company expects to generate adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $70 million-$80 million across all business segments and to generate free cash flow.
The company, however, noted in a regulatory filing in 2022 that it "started operating in 2014 and has yet to turn a profit."
The analyst adapts
In 2024, analysts predict Tilray will fall approximately 80% short of its now-shelved sales goal of $4 billion.
Cantor Fitzgerald analyst Zuanic lowered sales estimates for Tilray to $613.4 million in 2023 (down from $659.7 million) and $675.1 million in 2024 (down from $732.7 million).
According to Toronto-based BMO Capital Markets analyst Tamy Chen, Tilray's fiscal 2024 forecast has been trimmed.
According to the BMO analyst, the company will generate $643 million in sales in fiscal 2024, down from $702 million last summer.
Since Tilray's merger with Aphria in 2021, analysts have cut their sales forecasts.
As an example, Jefferies estimated that the newly unified Tilray would generate more than $1 billion in sales in 2022 before lowering its estimate.
In that year, Tilray reported net sales of $628.3 million.
The focus of Tilray
Tilray plans to continue growing its businesses in Canada, Europe, and the United States even with delayed federal legalization of marijuana in the country.
The company is focusing on both organic growth and acquisitions in Canada, as well as growing the medical and adult-use cannabis markets.
We've invested in leading and profitable CPG brands across craft beverages, alcohol and wellness consumer products in the U.S., the spokesperson said.
Among Tilray's U.S.-focused businesses are Breckenridge Distillery, Manitoba Harvest, and SweetWater Brewing Company.
According to Tilray, Montauk Brewing Co. is the fastest-growing craft beer brand in metro New York.
BMO's Chen recently told investors that Tilray's cannabis cultivation capacity might be too large for the market.
"Management indicated the lower utilization is temporary," Chen wrote, "but we wonder if (Tilray's) capacity will exceed its market opportunity for some time given how slow Canada has been rationalizing the number of LPs, and we think European legalization may take longer than expected."
Tilray is considering using excess capacity to grow fruits and vegetables, following Aurora Cannabis' example.
Tilray's spokesperson said in an email that the company's "focus is on driving revenue gains across our diverse portfolio, which will open up an additional revenue channel in the adult-use cannabis market pending federal legalization."
Our approach allows us to capitalize on the current market conditions and create a strong foundation for future growth in the U.S. federal cannabis industry."
Tilray is focusing on growing its CC Pharma business in Europe, which distributes medical cannabis to pharmacies, and increasing its market share in Germany and other countries.
In Cantanhede, Portugal, Tilray cut roughly a quarter of its workforce earlier this month.
It is our intention to leverage our current businesses in order to be a first-mover upon the expected legalization of adult-use in Germany and other European markets," the spokesperson said.
As a result, the company's management no longer guides for the target, Pablo Zuanic, managing director at Cantor Fitzgerald, wrote in a note to investors.
Tilray's target was undone by "delayed" legalization in the United States and Germany, as well as price compression, overproduction and slowing sales in Canada.
Leamington, Ontario- and New York-based company isn't the only cannabis company stumbling due to delays in legalization and U.S. reforms.
2023 will be a challenging year for the industry.
MJ Freeway's parent company, Colorado-based Akerna Corp., announced last week it was exiting the marijuana industry.
Curaleaf Holdings, a Massachusetts-based multistate operator, also announced it was exiting California, Oregon and Colorado last week.
Clever Leaves, a Colombian cannabis company, announced plans to leave Portugal.
The target is $4 billion
During a conference call with analysts in July 2021, Tilray CEO Irwin Simon first announced the $4 billion target.
Simon detailed his plan for achieving the $4 billion in annual revenue in a letter to Tilray shareholders on Aug. 26, 2021.
"This is the foundation that will enable us to reach our goal of 30% retail market share in Canada by fiscal year 2024 from our current combined retail market share of 16%."
As of now, Tilray controls roughly 8.3% of the Canadian recreational market, down by roughly 50% since then.
In an email to MJBizDaily, a spokesperson admitted that federal legalization in the United States and Germany did not go as planned.
According to the spokesperson, the $4 billion target was contingent upon federal legalization of cannabis in the U.S. - with a projected $100 billion market - as well as adult-use legalization in Germany.
Neither cannabis legalization nor the SAFE Banking Act, which would have protected financial institutions from federal punishment if they served regulated marijuana companies, were passed by U.S. lawmakers.
The German government, meanwhile, is already falling behind on its commitment to legalize cannabis.
The company recently reported a $61.6 million net loss for the quarter ended Nov. 30, bringing its six-month loss to $127.4 million.
There are complex societal, political, and economic forces at play, so executives should avoid latching onto optimistic scenarios involving federal legalization.
The company has not updated its revenue guidance for fiscal 2024, but its spokesperson said the company expects to generate adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $70 million-$80 million across all business segments and to generate free cash flow.
The company, however, noted in a regulatory filing in 2022 that it "started operating in 2014 and has yet to turn a profit."
The analyst adapts
In 2024, analysts predict Tilray will fall approximately 80% short of its now-shelved sales goal of $4 billion.
Cantor Fitzgerald analyst Zuanic lowered sales estimates for Tilray to $613.4 million in 2023 (down from $659.7 million) and $675.1 million in 2024 (down from $732.7 million).
According to Toronto-based BMO Capital Markets analyst Tamy Chen, Tilray's fiscal 2024 forecast has been trimmed.
According to the BMO analyst, the company will generate $643 million in sales in fiscal 2024, down from $702 million last summer.
Since Tilray's merger with Aphria in 2021, analysts have cut their sales forecasts.
As an example, Jefferies estimated that the newly unified Tilray would generate more than $1 billion in sales in 2022 before lowering its estimate.
In that year, Tilray reported net sales of $628.3 million.
The focus of Tilray
Tilray plans to continue growing its businesses in Canada, Europe, and the United States even with delayed federal legalization of marijuana in the country.
The company is focusing on both organic growth and acquisitions in Canada, as well as growing the medical and adult-use cannabis markets.
We've invested in leading and profitable CPG brands across craft beverages, alcohol and wellness consumer products in the U.S., the spokesperson said.
Among Tilray's U.S.-focused businesses are Breckenridge Distillery, Manitoba Harvest, and SweetWater Brewing Company.
According to Tilray, Montauk Brewing Co. is the fastest-growing craft beer brand in metro New York.
BMO's Chen recently told investors that Tilray's cannabis cultivation capacity might be too large for the market.
"Management indicated the lower utilization is temporary," Chen wrote, "but we wonder if (Tilray's) capacity will exceed its market opportunity for some time given how slow Canada has been rationalizing the number of LPs, and we think European legalization may take longer than expected."
Tilray is considering using excess capacity to grow fruits and vegetables, following Aurora Cannabis' example.
Tilray's spokesperson said in an email that the company's "focus is on driving revenue gains across our diverse portfolio, which will open up an additional revenue channel in the adult-use cannabis market pending federal legalization."
Our approach allows us to capitalize on the current market conditions and create a strong foundation for future growth in the U.S. federal cannabis industry."
Tilray is focusing on growing its CC Pharma business in Europe, which distributes medical cannabis to pharmacies, and increasing its market share in Germany and other countries.
In Cantanhede, Portugal, Tilray cut roughly a quarter of its workforce earlier this month.
It is our intention to leverage our current businesses in order to be a first-mover upon the expected legalization of adult-use in Germany and other European markets," the spokesperson said.
