Cannabis producer Tilray to focus investments on U.S., Europe as Canadian assets ‘overpriced’

Cannabis producer Tilray Inc. plans to focus the majority of its future investments on the U.S. and Europe, where the growth potential is highest, and will not purchase “overpriced supply assets” in Canada.

Tilray’s chief executive Brendan Kennedy said while Canada will continue to be an important market for the Nanaimo-based company, the opportunities south of the border and across the pond are “orders of magnitude larger.”

“We will not purchase or invest in what we believe to be overpriced supply assets in Canada, which we believe will erode in value in [the] medium- to longterm as the market normalizes. We believe that the field of battle has changed and that the U.S. and Europe are going to be more important over the long-term,” he told analysts on a conference call on Monday.

Kennedy made the comments as Tilray reported its latest earnings for the quarter ended Dec. 31, which included sales from recreational cannabis in Canada after legalization in October.

Tilray saw revenues surge by more than 200 per cent year-over year to $15.5 million US during the period. However, its net loss for the period also deepened to $31 million US or 33 US cents per share, compared to a net loss of $3 million US or four US cents per share a year earlier.

Analysts had estimated quarterly revenues of $14.15 million US and a net loss of $10.43 million US or 12 US cents per share, according to those surveyed by Thomson Reuters Eikon.

Tilray said that the increased net loss for the quarter was primarily due to the increase in operating expenses due to growth initiatives, expansion of international teams and costs related to financings and merger and acquisition activities.

The company’s average net selling price per gram rose to $7.52 US, up from $7.13 US during the same quarter one year earlier.

For the full 2018 financial year, Tilray reported revenue of $43 million US, up 110 per cent from the previous year, and net loss of $67.7 million US compared to $7.8 million US in 2017.

“We achieved this growth despite supply-chain constraints across Canada that have created pricing pressure for cannabis that meets our quality standards, forcing us to source from other suppliers,” Kennedy said.