The typical cannabis company these days struggles to produce any sales growth at all, thanks to stepped-up competition, ongoing product price deflation and consumers who are keeping their wallets closed. When companies produce some growth, it typically comes from store openings or acquisitions.
In this challenging environment, Canadian cannabis company Tilray Brands (TLRY) really stands out. It recently posted impressive 11% sales growth to $206.7 million for its third quarter ending February 28.
Normally, growth like that at a consumer staples company is driven by acquisitions. But that was not the case here. It came from core, organic sales growth of cannabis products. The cannabis sales growth was so strong that it even offset the weakness in Tilray’s struggling beverage division. Consumers continue to turn away from alcohol – like Tilray’s craft beer and spirits lines.
Double-Digit Growth at Tilray Brands (TLRY)
Here’s an overview of where Tilray’s growth came from.
* Cannabis revenue grew 19% to $64.8 million thanks to a 73% increase in international cannabis sales, and an 8% increase in Canadian sales. Cannabis gross profit increased 18% to $26 million. Tilray maintained the top slot in Canada among cannabis companies, as measured by total sales.
* Distribution sales, which includes international cannabis sales the company’s Tilray Pharma division, grew to $83 million compared to $61.5 million a year ago. Distribution gross profit increased to $10 million from $5.6 million.
* Tilray’s wellness division revenue grew 16% to $16.4 million. This division sells what the company markets as healthy snacks and drinks. Wellness gross profit increased 19% to $5.4 million.
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The Weak Beverage Sales
Beverage revenue fell 24% to $42.6 million from $55.9 million in the same quarter a year ago. Beverage gross profit was $13.6 million vs. $19.9 million.
Despite beer sales weakness, Tilray is doubling down on alcohol. It recently bought BrewDog, a U.K. craft beer brand, and it will start distributing Carlsberg beer in 2027. Tilray is the fourth-largest craft brewer in the U.S.
That beverage weakness weighed on income. Overall, net loss came in at $25.2 million. At least that was a lot better than the net loss of $793.5 million the year before. Net loss per share was -$0.24, an improvement from -$8.69 the year before. The company reported adjusted income of $0.02 per share compared to -$0.03.
Tilray ended the quarter with $264.8 million in cash and a net cash position of $3.5 million. Tilray guided for adjusted EBITDA growth of 13% to 31% for its fiscal year ending May 31, compared to fiscal year 2025, to $62 million to $72 million.
U.S. CBD Growth in the Cards
Tilray does well because it is good at catching growth trends in foreign markets, like Europe. Now the Canadian company has its eyes on expansion in another international market – the U.S.
The background here is that the U.S. Centers for Medicare and Medicaid Services (CMS) recently launched a pilot program that would allow doctors to recommend cannabidiol (CBD). Some patients may get up to $500 per year in coverage for those products.
Simon thinks his company will be a supplier. He says his company is negotiating with regulators at the Food and Drug Administration to ensure that Tilray’s Happy Flower CBD product meets U.S. standards. “We have a team that is working on this in the U.S. We produce CBD products internationally, so we have formulations, we have products. They just have to fit what the U.S. standards and regulations are.”
Initially, any CBD sales into the Medicare program will be minimal. But if the U.S. expands the pilot program, this would be another avenue of growth for Tilray. President Donald Trump is a big fan of medical cannabis (though not a user), so the odds are that Medicare’s CBD experiment will expand.
Hemp-Based THC Not Finished Yet
Tilray already sells hemp-derived THC drinks in the U.S. That’s a problem now, because hemp-based THC products – like popular THC drinks – are slated to go away in November. A new federal law reduces permissible THC levels to ineffective and insignificant amounts.
In the Tilray earnings call, CEO Simon made the out-of-consensus prediction that the U.S. hemp-derived THC product market will survive. Simon thinks the law banning these products will get rewritten in a way that extends the market. Or there could be new legislation that permits and regulates products with either 3 mg, 4 mg, or 5 mg doses, strong enough to get people high.
That would help Tilray, but judging by its performance, it can continue to do well in foreign markets, regardless.
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