The Week In Cannabis: Tilray Earnings And Reactions, Weed And Covid, Italy, Marijuana At The Airport And More

Below is a recap of the main news related to the cannabis industry and markets for the week of January 10, 2022.

Tilray’s Earnings And Reactions

Tilray, Inc. TLRY TLRY reported its financial results Monday for the second fiscal quarter ended November 30, 2021, with net revenue of $155 million, up by around 20% from $129 million in the same period year ago and down from $168 million in the first fiscal quarter.

The Canadian marijuana giant also announced a new parent name, Tilray Brands, Inc., reflecting the company’s evolution from a Canadian LP to a global consumer packaged goods company with a portfolio of cannabis and lifestyle CPG brands.

Net income increased to $6 million from a net loss of $89 million in the previous year's quarter. Adjusted EBITDA was $13.8 million, representing 8% growth compared to the preceding prior quarter and making for the eleventh consecutive quarter of positive Adjusted EBITDA; Gross profit of $32.8 million was a 7% decrease from $35.3 million in the prior-year quarter.

Following the report, Benzinga spoke with CEO Irwin Simon.

Analyst Reaction

After the results, Pablo Zuanic from Cantor Fitzgerald offered an updated investment model for Tilray. He maintained an Overweight but lowered the price target for the stock to $6.90 from $7.40 on reduced estimates.

“We attach our updated model after talking to management and the release of the 10-Q for the Nov quarter. Conditions in the domestic Canadian recreational market remain challenging, with market share erosion and wholesale destocking leading to a 30% sequential drop in reported sales,” Zuanic noted.

The analyst also highlighted that even though the new estimates reflect less bullish market share assumptions, “the company is implementing several adjustments that should reverse the market share slide.”

Zuanic added that Cantor was still impressed with Tilray's growth.

“Maybe, more importantly, we were positively impressed with the company’s sequential growth in the export business (~40%), generating $7.8 million in sales. As European countries start to legalize cannabis in the next few years (Germany by late 2023?), we believe TLRY is well-placed given its production and distribution infrastructure and established brands (especially in med tinctures).” 

Benzinga Cannabis’ content is now available in Spanish on El Planteo.

Later in the week, it was reported that Tilray ended its partnership with AB InBev BUD, quickly turning around to wrap up two previously announced deals to acquire Green Flash Brewing and Alpine Beer Co.

The Canadian cannabis giant purchased the California craft beer brands from WC IPA on Dec. 17, for $5.1 million (CA$6.4 million), in cash and stock, according to the filing with the U.S. Securities and Exchange Commission (SEC).

Cannabis And Covid

As scientists around the world work furiously for nearly the past two years in an attempt to resolve the ongoing global pandemic, new research on cannabis and COVID-19 is providing some hope.

Can cannabis help against the coronavirus?

According to a report, “Cannabinoids Block Cellular Entry of SARS-CoV-2 and the Emerging Variants,” published in the Journal of Natural Products, certain cannabinoid acids from hemp (Cannabis sativa) could prevent infection from the virus that causes COVID-19 by obstructing its entry into cells.

It should be noted this is very early data.

The study led by Richard van Breemen, a researcher with Oregon State's Global Hemp Innovation Center, College of Pharmacy and the Linus Pauling Institute discovered that two cannabinoid acids in hemp - cannabigerolic acid, or CBGA, and cannabidiolic acid, also known as CBDA have the ability to bind to the SARS-CoV-2 spike protein – the virus that causes COVID-19. By binding to the spike protein, these acids can block the virus from reaching into cells and causing infection, concluded the research.

“Orally bioavailable and with a long history of safe human use, these cannabinoids, isolated or in hemp extracts, have the potential to prevent as well as treat infection by SARS-CoV-2,” the researchers noted in the abstract of the study.

“These cannabinoid acids are abundant in hemp and in many hemp extracts,” van Breemen said, as quoted by local media. “They are not controlled substances like THC, the psychoactive ingredient in marijuana, and have a good safety profile in humans.”

Almost There: Italian Activists Collect Enough Signatures For Marijuana Legalization Referendum

In 2021, Italian activists formally presented the Supreme Court with more than half a million signatures gathered for a referendum to legalize the personal cultivation of marijuana and psychoactive mushrooms.

On Wednesday, Italian officials certified that activists had indeed collected enough signatures to put marijuana legalization on the ballot this spring, though there’s still one more procedural step before the measure can be officially put before the voters.

If the Constitutional Court allows the referendum to go forward, voters are expected to decide on the policy change sometime between April 15 and June 15. Should the referendum make it to the polls, a simple majority will be needed for it to be enacted.

Reports & Data

Cannabis Chart Of The Week: It's Been Better To Be A Lender Than A Borrower

Viridian Capital Advisors created an equal-weighted basket of Real Estate sector stocks, including AFC Gamma, IIPR, NewLake, and PowerReit (Chicago Atlantic IPO’d in December), shown by the green line in the graph. We also created an equal-weighted basket of the top 5 MSOs by market cap, Cureleaf CURLF, Green Thumb Industries GTBIF, Trulieve TCNNF, Verano VRNOF and Cresco Labs (OTC: CRLBF), shown by the orange line on the graph. We indexed the price of each basket so that 10/1/21 equals 100%.

The lender basket significantly outperformed the MSO basket over the period, scoring a 5% gain compared to a 15% loss.