Tilray, one of the larger licensed cannabis producers in Canada, spent February finalizing major acquisition deals. For $316 million (in U.S. dollars), Tilray will acquire Manitoba Harvest.
The Winnipeg-based company currently sells hemp products to Walmart, Costco, Kroger, CVS and Amazon, paving the way for Tilray to take advantage of the market growth tidal wave predicted in the wake of hemp legalization in the U.S. Manitoba Harvest “sells hemp-based granola, protein powder, milk and other food products at more than 13,000 points of sale across the U.S.,” according to Bloomberg.
Because hemp is now legal in the U.S., it’s a safe play for companies like Tilray that trade on U.S. stock exchanges. (Tilray trades under TLRY on the Nasdaq.) Cannabis remains illegal, but hemp product manufacturing was just greenlit as a new legal frontier, thanks to the 2018 Farm Bill’s passage.
"Tilray's acquisition of Manitoba Harvest is a milestone for the cannabis industry. It builds on the strategic partnerships we have formed with consumer brand industry leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and functional food and beverage categories," Tilray CEO Brendan Kennedy said in a public statement.
Up next for Manitoba Harvest: hemp-derived CBD product lines. While it’s uncertain how U.S. regulatory guidance will evolve on CBD products (outside of traditional, state-legal cannabis markets and licensed retailers), private and public companies have been lining up partnerships to take advantage of any CBD opportunities as they reveal themselves. The vision, according to a recent Brightfield Group report, is to link the surging demand for CBD products with the market share of businesses like Walmart and Costco—an economic synergy that would expand the hemp-derived CBD market to some $22 billion by 2022.
That tension—the waiting game behind CBD regulations in the U.S. and the major market moves undertaken by behemoth Canadian companies—is producing a groundswell of M&A activity. Think Constellation Brands’ investment in Canopy Growth. Think Altria’s investment in Cronos Group.
"Being part of Tilray will certainly give us an advantage," Manitoba Harvest CEO Bill Chiasson told CBC News.
Beyond Manitoba Harvest and its international CBD sales aspirations, though, Tilray also picked up Natura Naturals Holdings, which operates a licensed greenhouse cultivation facility in Ontario. The $52-million deal will provide Tilray an extra 662,000 square feet of Canadian market share. The Natura Natural Holdings greenhouse will now do business as High Park Gardens.
With that acquisition, Tilray will now operate three facilities in Canada and one in Portugal.
