Author: Solomon Israel

Beverage alcohol company Constellation Brands has converted its shares in Canadian cannabis company Canopy Growth Corp. into new exchangeable shares.

Constellation’s exchangeable shares may be converted back into Canopy common shares on a one-to-one basis, the companies announced Friday.

However, the two Constellation subsidiaries that now own the exchangeable shares don’t plan to convert them “until such time as the U.S. domestic sale of marijuana could not reasonably be expected to violate the Controlled Substances Act, the Civil Asset Forfeiture Reform Act (as it relates to violation of the Controlled Substances Act), and all related applicable anti-money laundering laws,” Constellation said in a news release.

The three remaining Constellation nominees to Canopy’s board have all resigned as part of the deal, and Constellation “no longer holds any governance rights in relation to Canopy Growth,” Canopy noted in its release.

Promissory note forgiven

Constellation subsidiary Greenstar Canada Investment Limited Partnership has also canceled and forgiven a promissory note to Canopy with principal worth 100 million Canadian dollars ($72.8 million), converting CA$81.2 million of the principal into shares and forgiving the remaining principal and interest.

Smiths Falls, Ontario-based Canopy said it now has CA$100 million less debt on its balance sheet.

“While we remain supportive of Canopy’s strategy, this transaction is expected to eliminate the impact to our equity in earnings and is aligned to our intent to not deploy additional investment in Canopy,” Constellation President and CEO Bill Newlands said in a statement.

Constellation’s move comes days after Canopy shareholders approved the creation of the exchangeable shares as part of a plan to create the company’s U.S.-domiciled holding company Canopy USA, which is meant to acquire Canopy’s existing U.S. cannabis assets.

“We look forward to maintaining an enduring positive relationship with (Constellation) as our largest shareholder, and to the further advancement of the Canopy USA strategy that this change enables as Canopy USA moves forward with the acquisitions of Wana, Jetty and Acreage,” Canopy CEO David Klein, a former Constellation executive, said in a statement.

Constellation-Canopy history

Constellation originally invested in Canopy in 2017, taking a 9.9% stake.

The Victor, New York-based alcohol company poured an unprecedented CA$5 billion into Canopy in 2018, acquiring more shares in a deal in which Constellation received board seats and warrants that could have boosted its stake in Canopy to more than 50%.

Constellation exercised some of those warrants in 2020.

By 2022, however, Constellation said it did not plan to invest any more capital in the Canadian cannabis operator.

Constellation allowed its warrants to purchase additional Canopy shares to expire last November.

Canopy’s latest quarterly net loss was CA$216.7 million, with net revenue of CA$78.5 million.

Shares of Canopy trade on the Nasdaq as CGC and on the Toronto Stock Exchange as WEED.

Constellation trades as STZ on the New York Stock Exchange.

Canadian cannabis and beverage alcohol company Tilray Brands has lowered its financial guidance, reducing expectations for investors in its third-quarter earnings announcement on Tuesday.

Tilray’s previous guidance for fiscal year 2024 of $68 million-$78 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) “is no longer feasible,” chief financial officer Carl Merton said during an earnings call on Tuesday morning.

“We have therefore lowered our adjusted EBITDA range to be between $60 (million) and $63 million,” he said.

Merton also said Tilray no longer expects to meet its previous guidance of achieving positive adjusted free cash flow for the full 2024 fiscal year.

Tilray attributed that change “to delayed timing for collecting cash on various asset sales,” according to a news release.

New York- and Leamington, Ontario-based Tilray, which reports its earnings in U.S. dollars, reported a $105 million net loss for the third quarter ended Feb. 29.

Tilray posted net revenue of $188.3 million, up roughly 30% from $145.6 million in revenue during the same quarter in 2023 but down from $194 million in net revenue during the company’s second quarter of 2024.

The company’s quarterly net revenue mix included:

• $54.7 million from beverage alcohol.
• $63.4 million from cannabis.
• $56.8 million from distribution.
• $13.4 million from wellness.

Tilray executives commented on Canada’s challenging cannabis excise tax structure in advance of next week’s federal budget release, after a parliamentary finance committee proposed capping excise taxes at 10% of the value of a cannabis product.

Tilray CEO Irwin Simon said the company would save $80 million annually if that recommendation were implemented.

Tilray paid $21.8 million in Canadian cannabis excise taxes during the third quarter.

Simon said the company believes “the rescheduling of cannabis from Schedule 1 to Schedule 3 in the U.S. would provide a path for Tilray to sell pharmaceutical-grade medical cannabis in the U.S., subject to doctor prescriptions.”

“This is a different strategy from what (U.S. multistate cannabis operators) are doing today,” Simon said during his prepared remarks.

Asked to provide further details during a Q&A session with equity analysts, Simon said: “Is there a possibility with (the North American Free Trade Agreement) or with other rules that we can export cannabis from Canada that’s GMP-certified?”

“Today you can export cannabis from Canada to other countries around the world if it’s GMP-certified, so I’m not sure why that wouldn’t be the case in the U.S. if that happens.”

Tilray operates a medical marijuana-distribution business in Germany, which recently legalized recreational cannabis without creating a full commercial market.

In Germany, Simon said “new opportunities for Tilray flow mostly from the removal of medical cannabis from the Narcotics Act.”

“This de-schedule change is expected to significantly expand the medical cannabis market in Germany, as it would allow for more doctors to prescribe medical cannabis more easily to patients and potentially allow for broader health insurance coverage.”

Tilray reported $146.3 million in cash and equivalents as of the end of the quarter.

Shares of the company trade as TLRY on the Nasdaq and the Toronto Stock Exchange.

Solomon Israel can be reached at solomon.israel@mjbizdaily.com.

Canadian cannabis and beverage alcohol company Tilray Brands has lowered its financial guidance, reducing expectations for investors in its third-quarter earnings announcement.

Tilray’s previous guidance for fiscal year 2024 of $68 million-$78 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) “is no longer feasible,” Chief Financial Officer Carl Merton said during a Tuesday earnings call.

“We have therefore lowered our adjusted EBITDA range to be between $60 (million) and $63 million,” he said.

Merton also said Tilray no longer expects to meet its previous guidance of achieving positive adjusted free cash flow for the full 2024 fiscal year.

Tilray attributed that change “to delayed timing for collecting cash on various asset sales,” according to a news release.

New York- and Leamington, Ontario-based Tilray, which reports its earnings in U.S. dollars, reported a $105 million net loss for the third quarter ended Feb. 29.

Tilray posted net revenue of $188.3 million, up roughly 30% from $145.6 million in revenue during the same quarter in 2023 but down from $194 million in net revenue during the company’s second quarter of 2024.

The company’s quarterly net revenue mix included:

• $54.7 million from beverage alcohol.
• $63.4 million from cannabis.
• $56.8 million from distribution.
• $13.4 million from wellness.

Tilray executives commented on Canada’s challenging cannabis excise tax structure in advance of next week’s federal budget release after a parliamentary finance committee proposed capping excise taxes at 10% of the value of a marijuana product.

CEO Irwin Simon said Tilray would save $80 million annually if that recommendation were implemented.

Tilray paid $21.8 million in Canadian cannabis excise taxes during the third quarter.

Simon said the company believes “the rescheduling of cannabis from Schedule 1 to Schedule 3 in the United States would provide a path for Tilray to sell pharmaceutical-grade medical cannabis in the U.S., subject to doctor prescriptions.”

“This is a different strategy from what (American marijuana multistate operators) are doing today,” Simon said during his prepared remarks.

Asked to provide further details during a Q&A session with equity analysts, Simon said: “Is there a possibility with (the North American Free Trade Agreement) or with other rules that we can export cannabis from Canada that’s GMP-certified?”

“Today you can export cannabis from Canada to other countries around the world if it’s GMP-certified, so I’m not sure why that wouldn’t be the case in the U.S. if that happens.”

Tilray operates a medical marijuana-distribution business in Germany, which recently legalized recreational cannabis without creating a full commercial market.

In Germany, Simon said, “new opportunities for Tilray flow mostly from the removal of medical cannabis from the Narcotics Act.”

“This de-schedule change is expected to significantly expand the medical cannabis market in Germany, as it would allow for more doctors to prescribe medical cannabis more easily to patients and potentially allow for broader health insurance coverage.”

Tilray reported $146.3 million in cash and equivalents as of the end of the quarter.

Shares of the company trade as TLRY on the Nasdaq and the Toronto Stock Exchange.

Solomon Israel can be reached at solomon.israel@mjbizdaily.com.

Canadian cannabis and beverage alcohol company Tilray Brands has lowered its financial guidance, reducing expectations for investors in its third-quarter earnings announcement.

Tilray’s previous guidance for fiscal year 2024 of $68 million-$78 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) “is no longer feasible,” Chief Financial Officer Carl Merton said during a Tuesday earnings call.

“We have therefore lowered our adjusted EBITDA range to be between $60 (million) and $63 million,” he said.

Merton also said Tilray no longer expects to meet its previous guidance of achieving positive adjusted free cash flow for the full 2024 fiscal year.

Tilray attributed that change “to delayed timing for collecting cash on various asset sales,” according to a news release.

New York- and Leamington, Ontario-based Tilray, which reports its earnings in U.S. dollars, reported a $105 million net loss for the third quarter ended Feb. 29.

Tilray posted net revenue of $188.3 million, up roughly 30% from $145.6 million in revenue during the same quarter in 2023 but down from $194 million in net revenue during the company’s second quarter of 2024.

The company’s quarterly net revenue mix included:

• $54.7 million from beverage alcohol.
• $63.4 million from cannabis.
• $56.8 million from distribution.
• $13.4 million from wellness.

Tilray executives commented on Canada’s challenging cannabis excise tax structure in advance of next week’s federal budget release after a parliamentary finance committee proposed capping excise taxes at 10% of the value of a marijuana product.

CEO Irwin Simon said Tilray would save $80 million annually if that recommendation were implemented.

Tilray paid $21.8 million in Canadian cannabis excise taxes during the third quarter.

Simon said the company believes “the rescheduling of cannabis from Schedule 1 to Schedule 3 in the United States would provide a path for Tilray to sell pharmaceutical-grade medical cannabis in the U.S., subject to doctor prescriptions.”

“This is a different strategy from what (American marijuana multistate operators) are doing today,” Simon said during his prepared remarks.

Asked to provide further details during a Q&A session with equity analysts, Simon said: “Is there a possibility with (the North American Free Trade Agreement) or with other rules that we can export cannabis from Canada that’s GMP-certified?”

“Today you can export cannabis from Canada to other countries around the world if it’s GMP-certified, so I’m not sure why that wouldn’t be the case in the U.S. if that happens.”

Tilray operates a medical marijuana-distribution business in Germany, which recently legalized recreational cannabis without creating a full commercial market.

In Germany, Simon said, “new opportunities for Tilray flow mostly from the removal of medical cannabis from the Narcotics Act.”

“This de-schedule change is expected to significantly expand the medical cannabis market in Germany, as it would allow for more doctors to prescribe medical cannabis more easily to patients and potentially allow for broader health insurance coverage.”

Tilray reported $146.3 million in cash and equivalents as of the end of the quarter.

Shares of the company trade as TLRY on the Nasdaq and the Toronto Stock Exchange.

Solomon Israel can be reached at solomon.israel@mjbizdaily.com.

Canadian cannabis and beverage alcohol company Tilray Brands has lowered its financial guidance, reducing expectations for investors in its third-quarter earnings announcement.

Tilray’s previous guidance for fiscal year 2024 of $68 million-$78 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) “is no longer feasible,” Chief Financial Officer Carl Merton said during a Tuesday earnings call.

“We have therefore lowered our adjusted EBITDA range to be between $60 (million) and $63 million,” he said.

Merton also said Tilray no longer expects to meet its previous guidance of achieving positive adjusted free cash flow for the full 2024 fiscal year.

Tilray attributed that change “to delayed timing for collecting cash on various asset sales,” according to a news release.

New York- and Leamington, Ontario-based Tilray, which reports its earnings in U.S. dollars, reported a $105 million net loss for the third quarter ended Feb. 29.

Tilray posted net revenue of $188.3 million, up roughly 30% from $145.6 million in revenue during the same quarter in 2023 but down from $194 million in net revenue during the company’s second quarter of 2024.

The company’s quarterly net revenue mix included:

• $54.7 million from beverage alcohol.
• $63.4 million from cannabis.
• $56.8 million from distribution.
• $13.4 million from wellness.

Tilray executives commented on Canada’s challenging cannabis excise tax structure in advance of next week’s federal budget release after a parliamentary finance committee proposed capping excise taxes at 10% of the value of a marijuana product.

CEO Irwin Simon said Tilray would save $80 million annually if that recommendation were implemented.

Tilray paid $21.8 million in Canadian cannabis excise taxes during the third quarter.

Simon said the company believes “the rescheduling of cannabis from Schedule 1 to Schedule 3 in the United States would provide a path for Tilray to sell pharmaceutical-grade medical cannabis in the U.S., subject to doctor prescriptions.”

“This is a different strategy from what (American marijuana multistate operators) are doing today,” Simon said during his prepared remarks.

Asked to provide further details during a Q&A session with equity analysts, Simon said: “Is there a possibility with (the North American Free Trade Agreement) or with other rules that we can export cannabis from Canada that’s GMP-certified?”

“Today you can export cannabis from Canada to other countries around the world if it’s GMP-certified, so I’m not sure why that wouldn’t be the case in the U.S. if that happens.”

Tilray operates a medical marijuana-distribution business in Germany, which recently legalized recreational cannabis without creating a full commercial market.

In Germany, Simon said, “new opportunities for Tilray flow mostly from the removal of medical cannabis from the Narcotics Act.”

“This de-schedule change is expected to significantly expand the medical cannabis market in Germany, as it would allow for more doctors to prescribe medical cannabis more easily to patients and potentially allow for broader health insurance coverage.”

Tilray reported $146.3 million in cash and equivalents as of the end of the quarter.

Shares of the company trade as TLRY on the Nasdaq and the Toronto Stock Exchange.

Solomon Israel can be reached at solomon.israel@mjbizdaily.com.