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Video: Tilray CEO Discusses Aphria Merger, US Market Ambitions, Cannabis As A CPG Business, And More

May 4, 2021 1:17 pm
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Video: Tilray CEO Discusses Aphria Merger, US Market Ambitions, Cannabis As A CPG Business, And More

On Monday, the cannabis industry witnessed the creation of the world's largest cannabis company measured by revenue, as two Canadian giants, Tilray Inc. (NASDAQ:TLRY) and Aphria Inc. (NASDAQ:APHA), announced the closing of their merger.

Tilray and Aphria had been in negotiations since fall 2020, which ultimately resulted in shareholders of both companies voting in favor of the merger.

Irwin Simon, CEO of the 'new' Tilray and former Aphria CEO, called Tilray "the right partner."

Shortly after the historic agreement was announced, Simon was a guest on Benzinga's Cannabis Insider show, co-hosted by Spencer Israel and Javier Hasse.

"We had to do some consolidation there," Simon said of the Canadian cannabis market.

And while there were "stops and starts" during the merger talks with Brendan Kennedy, current director and former Tilray CEO, they finally sat down and came to a beneficial arrangement for shareholders of both companies, Simon told Cannabis Insider.

"I think there are times individuals like to do something differently," and "times you want to step back," Simon commented on Kennedy taking a more passive role following the merger. 

Building Cannabis Business As CPG Business

Simon also addressed cannabis as a quickly evolving category, emphasizing that cannabis needs to be cannabis from the product standpoint.

"We're not marijuana, we're not weed," he added. 

Cannabis should be built around a consumer-packaged goods business, he noted, emphasizing that it is no different from other categories such as food and beverage.

"We’ve got to come out and brand this category," and build it around other brands that relate to adult use, medical use, edibles, and drinks, he said.

Simon stressed the importance of regulations and quality control in order to build trust among consumers and to keep them informed and educated on what they’re purchasing.

Last but not least, Simon said it was critical to comprehend the benefits of cannabis-related products and to find the best way to market them.

Tilray Outside Canada

With the knowledge of doing and building businesses in Canada, which along with Uruguay have legalized recreational cannabis on a national level, the newly merged company will continue to function the same in the U.S. and Europe.

To that end, the new cannabis-focused CPG company plans to utilize Tilray's consumer packaged goods presence which relies on SweetWater, a cannabis lifestyle branded craft brewer, as well as CBF brand Manitoba Harvest – available in over 17,000 stores in North America.

Simon said they plan to seek out businesses that are "complementary to our existing businesses," such as other drink and food companies that can parlay THC and CBD products.

"I want to be able to sell to convenience stores and supermarkets," and create "product lines that are diversified."

Simon nevertheless admitted that he would "rather wait and see what's the best way to jump into it," once legalization occurs.

Compared to its U.S. counterparts, Canadian LPs are held to a different standard from an investor standpoint due to trading on both NASDAQ and TSX, which Simon noted have "stricter regulations."

On the other hand, "we don't have the population, and we don't have the depth and breadth that the U.S. markets have."

Going East

Apart from expanding its international presence by utilizing the company’s medical cannabis brands, distribution network in Germany and European Union's Good Manufacturing Practice supply chain, Simon believes there are "tremendous opportunities both from CBD and THC side" in China, India, and the Middle East. "We would probably go down the medical side first."

Once the world overcomes the many setbacks imposed by the current health crisis, Simon expects business will thrive.

"There's a lot of pent-up demand for the product," he said, adding that new products will be easier to introduce once stores begin to open up.

A strong believer in the benefits of the Tilray-Aphria merger, Simon used an agricultural expression to underscore the value and promise he views are in store for the new company and its potential growth.

"When you're green, you're growing, when you're ripe, you rot."

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