National Post (National Edition)
POT FIRM TILRAY HAS NANAIMO BUZZING
WHETHER STOCK IS UP OR DOWN, COMPANY SEEN AS A BONANZA
An $11-billion market capitalization doesn’t get you much of an office. The nondescript headquarters of pot producer
Tilray Inc., whose market value briefly exceeded that of American Airlines Group last week, is a beige, twostorey building with blue trimmings in Nanaimo, a two-hour ferry ride from Vancouver.
It sits in an industrial area behind a chain-link fence topped with barbed wire.
But Tilray’s wild ride on Wall Street — one of the most remarkable yet in the euphoria surrounding marijuana stocks — has this city of 90,000 on Vancouver Island buzzing.
“Marijuana’s the flavour of the year — everybody’s been clamouring to buy,” says Mike Tomkins, an independent financial adviser in Nanaimo, who’s had several clients that invested in Tilray in recent months. He advised them to cash out at least part of their holdings during the stock’s parabolic climb last week to as high as $300 a share.
Did they listen? “Never,” he said by phone. “In most of their opinions, this is just the tip of the iceberg — things are just getting started.”
Tilray, backed by billionaire investor Peter Thiel’s Founders Fund, is one of more than 100 cannabis producers licensed to supply Canada’s medical market and also exports to 10 countries. The company declined a request to tour its Nanaimo facility, though it did provide photos of the 60,000-square-foot plant producing more than 50 cannabis strains that treat everything from drug-resistant epilepsy in children to lung disease. Chief executive Brendan Kennedy wasn’t available for an interview.
Tilray’s poised to capture market share with new greenhouses in Ontario and the Canadian rights to distribute Marley Natural, a line of cannabis products developed with the estate of reggae icon Bob Marley.
Kim Smythe, president of the Greater Nanaimo Chamber of Commerce, is a believer in the company. He participated in Tilray’s July IPO priced at $17 and rues letting his broker talk him out of investing in the firm much earlier when it was still private.
“I could’ve gotten in on such a ground level,” said Smythe, who hasn’t sold any of his Tilray shares.
At a chamber event last Wednesday, Smythe says he was accosted by a woman he knows — a debt-relief counsellor, no less — who was buying Tilray stock as fast as she could.
Tomkins recounts being in a parking lot recently when his ex-mother-in-law approached him to ask about buying marijuana stock.
“That’s when you know everyone’s talking about it,” Tomkins said.
For Nanaimo — a roughand-tumble logging and fishing town — Tilray is more than hype. In a region where 95 per cent of businesses employ less than 25 people, Tilray with some 300 employees is one of the biggest employers, said Amrit Manhas, Nanaimo’s economic development officer.
The company, which sells dried cannabis, oils, capsules and accessories online, accounts for the bulk of the local Fedex depot’s business. At one point, its executives were the main customers for a direct floatplane service to Seattle, where Tilray’s biggest investor Privateer Holdings is based. A study estimated the company’s economic impact at $48.1 million in 2014 — equivalent to about half the city’s tax revenue that year.
Nanaimo was quick to sense opportunity, setting clear zoning guidelines to attract medical cannabis producers in 2013. It won over Tilray, which was considering sites in Ontario and Saskatchewan, with its low cost of business, easy access to markets, and supportive environment, according to Manhas.
There was also another reason: the area’s long, intimate history with pot.
Recreational marijuana use has long thrived in B.C.
B.C. Bud is considered among the best in the world. Locals on Vancouver Island describe families that have earned their livelihood for three generations cultivating cannabis. Early on, Tilray was drawn by the availability of quality marijuana, as well as a cannabis-savvy labour pool, said Smythe. “A lot of their initial starter plants were sourced locally” from Vancouver Island and other parts of British Columbia.