Tilray has been one of the most successful cannabis producers in Canada in 2018. Here’s why.
As 2018 comes to an end, it’s time to do our yearly review of cannabis producers in Canada, and this year we’ve chosen to review 4 companies:
In today’s article, we’ll cover Tilray as it is the first on our list due to the immense success this company made.
Tilray was first valued at $10 billion USD in mid-September, only to reach $20 billion a few days later.
Currently, Tilray is valued at around $7 billion USD as the stock has seen a steep fall in December.
Signed supply deals with 5 provinces
The first move Tilray made in January 2018 was to secure a deal with one of the biggest retail presences in Canada—Shoppers Drug Mart.
The deal was constructed so that if Shoppers Drug Mart becomes a licensed producer (which it did later in September) Tilray was to supply the company with branded medical cannabis products.
Right after that, Tilray signed an LOI to supply Québec and Manitoba:
- Québec: Up to 5,000 kg of cannabis per year for three years
- Manitoba: Up to 3,000 kg of cannabis and up to 4,000 liters of cannabis oil per year for five years
In March 2018, Tilray managed to get in touch with Pharmasave, one of the larger pharmacy chains in Canada. According to their agreement, Tilray was to supply premium medical cannabis products through Pharmasave.
A little later in August, Tilray (through its subsidiary High Park Company) signed 3 very significant supply deals with the following provinces:
- Nova Scotia
- Prince Edward Island
All three deals were structured so that the High Park Company supplies the provinces with adult-use brands of recreational cannabis. We’ll get to High Park a bit later.
Made some great deals abroad
Besides making things happen at home, Tilray also made great deals abroad.
The first deal Tilray made with a foreign government this year happened in South Africa, as the country just recently legalized medical marijuana. According to the details of the deal, Tilray will export medical cannabis products for nationwide distribution to qualified patients through pharmacies.
Another major deal came about when Tilray exported a bulk supply of medical cannabis flower to Germany in September. In doing so they became the only company to offer both oil and flower on the German market.
The company also announced that it has reached a deal with the Canadian government, as well as the UK and the Australian government to export 2:100 CBD oil to critically ill patients in those countries.
In Latin America, Tilray acquired an existing import and distribution partner Alef Biotechnology SpA which officially relaunched as Tilray Latin America SpA. Tilray Latin America will import, produce and distribute Tilray-branded medical cannabis products in Chile and create a hub to distribute Tilray products throughout the entire Latin America.
Lastly, the company reached a deal with AB InBev to research and develop non-alcoholic THC and CBD beverages. Each company intends to invest up to $50 million USD for a total of up to $100 million USD.
Raised well over $850M
This year’s fundraising turned out to be something Tilray was born to do. The company held 3 fundraising rounds in 2018 in which it raised over $850 million CAD.
Early on in 2018, Tilray announced the completion of Series A funding round led by Global Institutional Investors. According to the press release, Tilray raised money to increase production capacity and expand distribution in North America and Europe. The company managed to raise C$60 million in a round comprised of leading global institutional investors.
In July, the executives decided it was time for Tilray become the first Canadian licensed producer listed on a US stock exchange, and pointed their proverbial crosshairs at NASDAQ.
Tilray sold 10,350,000 of their shares for a total of $153 million USD at $17 per share.
Just two months later, in September, a single share of Tilray was at one point valued at an incredible $300 USD and closed that day at $214.
That being said, Tilray managed to score its biggest cash load later in the year.
In October, Tilray announced that it has closed its offering of 5.00% Convertible Senior Notes due 2023 for gross proceeds of $450 million USD in a private placement. The money from that private placement is for future acquisitions, general corporate purposes, and to repay the approximately US$9.1 million existing mortgage for its facility in BC.
Improved their strategic partnerships
As far as appointments and business strategy go, there is little others could have done this year to outmatch Tilray.
For starters, Tilray managed to form a strategic alliance with one of the leading pharmaceutical companies—Sandoz Canada. The two companies combined their forces in order to accelerate innovation and increase the availability of high-quality medical cannabis products.
Sometime later, Tilray added several members to the Board of Directors:
- Rebekah Dopp, a Principal in Global Partnerships at Google
- “Scotty” Greenwood, CEO of the Canadian American Business Council
- Christine St.Clare, founder of St.Clare Advisors and formerly a Partner at KPMG
Tilray also formed its International Advisory Board in December, which is now providing guidance to Tilray’s executive team and Board of Directors as the company pursues its aggressive global growth strategy.
Put High Park Company on its feet
High Park Company was formed to produce and distribute a broad-based portfolio of adult-use cannabis brands and products. The company is a subsidiary of Tilray, and it received a sales license from Health Canada on October 1.
Prior to that, the company has seen a lot of movement and action, as it was Tilray’s primary tool in negotiating supply deals with the provinces.
The first victim of High Park Company was Quebec, as Tilray signed a deal with the SAQ to supply them with 5,000 kg of cannabis.
The second deal happened between HPC and the Yukon the Liquor Corporation, in which HPC will be supplying Yukon with non-medical cannabis.