You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We no longer send these by email as we did in the past, but we post this and all of the newsletters on our website here.
Friends,
Today was the first day in two months that a large cannabis company that reports its financials in U.S. dollars reported, and the report was not good. Tilray Brands reported overall revenue growth in its fiscal Q1, but its cannabis revenue plunged. The company slid down the Revenue Rankings page, with $61.2 million in cannabis revenue falling from 12th place to 14th on the 15% sequential and 13% annual decline.
Canada has seen its overall cannabis sales growth slow as it has become a mature legal market for adult-use. In our most recent monthly update, we pointed to the rebound in July. Still, though, growth has been quite slow. The July sales are down from the monthly peak in August of 2023 at C$469 million, and they were down 3.9% from a year earlier. So far in 2024, Canadian cannabis sales are down about 0.8% year-to-date.
Looking at the data for the quarter that Tilray Brands reported is challenged by the fact that StatsCan hasn’t yet released the August data for the country. Canadian cannabis sales in the first two months of Tilray’s fiscal Q1 fell 2.1%. Tilray’s cannabis sales fell 13%, which is a lot worse than the overall market move. Additionally, it was helped by German medical cannabis sales growth, according to its press release. Overall revenue fell way short of what was expected, and adjusted EBITDA for the company, while positive, was substantially lower than what was expected.
I recently discussed some Canadian LP bargains here, and they have declined somewhat since that newsletter. I continue to like Organigram and Village Farms, which comprise now 40% of my Beat the Global Cannabis Stock Index model portfolio at 420 Investor. The NCV Canadian Cannabis LP Index closed at a new all-time low yesterday.
In that newsletter article, I discussed Tilray Brands and Canopy Growth as being overvalued and potentially weighing on the sub-sector, and I have written an article recently at Seeking Alpha discussing how Tilray will keep declining. The company is about to start its conference call, and it hasn’t yet filed its 10-Q. I expect that TLRY could post an all-time low, taking out the prior low of $1.50 from June 2023. Yes, the stock is down a lot from its spike above $5 in late 2022, but it looks expensive and is not a good cannabis company. Investors have a chance to buy some very cheap Canadian LPs, though they are still up year-to-date. I have my eyes on Cronos Group, which I don’t currently include in my model portfolio. Here are the year-to-date returns for the five LPs that I include on my Focus List at 420 Investor:
There are a lot of opportunities for cannabis investors that go beyond the two Canadian LPs that I like so much right now, both in Canada and in the U.S. Cannabis investors need to shed their love for Tilray, in my view.
This week’s newsletter is sponsored by The Dragich Law Firm PLLC
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is what we published this past week:
Exclusives
Cannabis Sales Growth Was Slow in September
Florida Medical Cannabis Market Faces a Big Risk
Tilray Cannabis Revenue Falls 13% in FY25-Q1
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Sincerely,
Alan
