MW Why Tilray is betting on the growing popularity of THC drinks as cannabis sales drop

By Steve Gelsi

Company's hemp-derived drinks are now available in 10 states

Tilray Brands Inc. said its hemp-derived THC drinks now sell in 10 U.S. states as a business line offering more growth for the Canadian company, while its core cannabis sales fell in the latest quarter.

Tilray also said it doesn't expect any impact from tariffs on its business since its U.S. beverage brands are solely manufactured and distributed within the 50 states, while its cannabis brands in Canada are produced domestically.

Tilray $(TLRY)$ said it booked $1.4 million in THC drink sales in its fiscal year to date. It has also expanded the distribution of these drinks in Florida, Alabama, Georgia, North Carolina, South Carolina, Tennessee, Louisiana and New Jersey, as well as through online direct-to-consumer channels.

"Multi-state retailers such as Total Wine and ABC ... have expressed strong interest in this category and new growth opportunity," the company said.

While THC from cannabis is illegal on a federal level, the 2018 Farm Bill allowed trace amounts of THC in hemp. Cannabis and drink companies have been taking this small portion of THC in hemp and refining it for use as a psychoactive ingredient in drinks.

While federal reforms in the U.S. appear to be stalled, Tilray said it sees opportunities in the alcohol, cannabis and wellness industries. It's also working to grow its U.S. beer sales.

Meanwhile, Tilray's third-quarter cannabis revenue fell to $54.3 million from $63.4 million in the year-ago period, partly due to a decision to "pause" its presence in "margin dilutive" categories such as vapes and infused pre-rolls.

While sales fell, gross margins in cannabis grew to 41% from 33%, its highest in two years.

Tilray's third-quarter net loss widened to $794.41 million, or 87 cents a share, from a loss of $97.52 million, or 12 cents a share, in the year-ago quarter.

The loss included about $700 million of noncash impairments due to "macroeconomic conditions," as well as declines in market capitalization, foreign exchange losses, plus nonrecurring transaction and restructuring charges and other items.

Tilray reported an adjusted third-quarter result of break-even, which was ahead of the analyst estimate for a loss of 4 cents a share.

Tilray's third-quarter revenue fell to $185.8 million from $188.3 million in the prior year quarter. The FactSet consensus estimate was for revenue of $210 million.

The company has also reduced its debt to less than one times its earnings before interest, taxes, depreciation and amortization on a trailing 12-month basis.

"We will not seek sales growth merely for the sake of sales if it does not add to the bottom line and benefit our shareholders," the company said.

Tilray's stock fell 3% in premarket trading.

The stock is down 56% so far in 2025, while the Amplify Alternative Harvest ETF MJ has fallen 35.8% and the AdvisorShares Pure U.S. Cannabis ETF MSOS has lost 43.8%.

Also read: Trulieve, Curaleaf and Green Thumb launch hemp-based THC drinks as cannabis reforms stall

-Steve Gelsi

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April 08, 2025 08:27 ET (12:27 GMT)

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