Tilray CEO Irwin Simon expects marijuana legalization in the U.S. to happen within the next two years.
Citing the recent legislative push to end the federal prohibition of marijuana, “I see over the next 18-to-24 months that cannabis in some format will have legalization,” Simon told Yahoo Finance Live (video above), later adding: “Trust me: When legalization does happen, we will be ready… to be a part of it.”
The Canadian cannabis company — listed on both the Nasdaq (TLRY) and the Toronto Stock Exchange (TLRY.TO) — currently has around 14% market share in the medical and adult recreational use cannabis market in Canada, Simon noted, with an objective to reach 30%.
And while “we don’t to anything in cannabis today in the U.S.” due to the federal prohibition, Simon said, Tilray is preparing for the future ability to further enter the American market.
“As we look at what companies are out there,” Simon said, “do we look at having options on them to buy at once the legalization happens? Do we have some type of relationship with them? The answer is Yes, and that will give us the opportunity to be a player in the U.S. once legalization does happen.”
Tilray, which subsumed cannabis company Aphria earlier this year, is also looking to issuing additional shares to prepare for acquisition opportunities.
“We have a strong balance sheet,” Simon said. “In regards to legalization happening in the U.S., I think we will be ready to partner when that does happen. But right now, there is very little I can do other than on an option or potentially partner with someone when that does happen.”
The company’s current line of product offerings in the U.S. include SweetWater Brewing Company beer and Manitoba Harvest hemp-infused foods. (In Europe, the company processes and distributes cannabis for medical use and also runs a food-and-drink business.)
“My playbook here is to create the largest cannabis company that’s built around consumer brands,” Simon said. “And those brands will be built around adult use, will be built around medical cannibas, [and] will be built around drinks, edibles, and food.”
Tilray’s share prices surged over 25% on Wednesday after a strong earnings report in spite of Canada’s pandemic-related restrictions. The company reported a net income of $33.6 million for the fiscal fourth quarter that ended May 31 after reporting a loss of $84.3 million for the same quarter last fiscal year.
‘Almost 80% of our shareholder base today is a retail shareholder base’
The cannabis sector has been consistently popular in terms of investment by retail investors in recent years, allowing companies like Tilray to develop into multi-billion dollar players.
Simon attributed part of the company’s success to the casual way in which they communicate with predominately retail investors.
“It’s almost like how I communicate with my kids every day is the way I communicate with my retail shareholders,” Simon told Yahoo Finance Live (video above). “So yes, from a social media [standpoint], I’m out there, trying to talk to them every day. As a meme stock, we’re out there, getting the information out, and from a digital standpoint, getting messages out.”
Simon added that “almost 80% of our shareholder base today is a retail shareholder base, and I love it because they’re sophisticated. They’re educated investors.”
Simon also emphasized the importance of companies staying connected with investors, especially with a constantly shifting shareholder base like Tilray’s.
“Unfortunately, they may be a shareholder today, and they’re not a shareholder tomorrow,” Simon said. “So keeping up with your shareholder base can be somewhat difficult, but you’ve got to get out there and communicate to your shareholders.”
Furthermore, though much of Tilray’s shareholder base is retail investors, Simon is looking to spur further institutional interest in the company.
“One of my jobs is to get out there and continuously bring in the big institutional shareholders to be investing [in] Tilray, and taking them through our story, and our strategy, how we’re going to grow this company, what we plan to do if legalization does happen, where medical cannabis is a big part of our business, where, ultimately, cannabis-infused foods are a big part of our business,” Simon said.