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Germany’s going “green” – why I am bullish on $TLRY

Germany's going "green" - why I am bullish on $TLRY

Hi all, this post goes to show why I'll be balls deep in $TLRY at the end of this year.

The company

From their website:

Tilray, Inc. is a leading global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America that is changing people's lives for the better – one person at a time – by inspiring and empowering the worldwide community to live their very best life by providing them with products that meet the needs of their mind, body, and soul and invoke a sense of wellbeing. Tilray’s mission is to be the trusted partner for its patients and consumers by providing them with a cultivated experience and health and wellbeing through high-quality, differentiated brands and innovative products. A pioneer in cannabis research, cultivation, and distribution, Tilray’s unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and alcoholic beverages.

Tilray sells cannabis oil, dried whole flowers, vape pens and edibles in e.g. canada and sells medical cannabis in conjunction with Novartis' Sandoz subsidiary worldwide in legal-medical markets. Tilray also focuses on cannabis research. Find out later on why that's important for the catalyst.

With 2100 employees lead by HAIN founder Erwin Simon, the following results for the first fiscal quarter were obtained:

Net revenue increased 43% to $168 million during the first quarter from $117 million in the prior year quarter

International market leader and #1 in Germany with medical cannabis extracts.

Net loss of $34.6 million during the first quarter compared to net loss of $21.7 million in the prior year quarter.

Adjusted EBITDA of $12.7 million in the first quarter 2022, 58% growth compared to the prior year quarter, and the tenth consecutive quarter of positive Adjusted EBITDA. If Adjusted EBITDA were normalized for Aphria’s production costs, metric would have been closer to $17 million.

Considering their main income comes from cannabis retail stores in Canada which were closed until June, this is remarkably impressive.

Let's have a closer look at one specific market regarding the catalyst: The European Union, especially Germany:

Tilray's EU portfolio

Tilray's cultivation space spans over 250000sqm in Canada, but also in Portugal.

While Tilray's products in the US and Canada are of recreational and medical character, their EU presence focuses on medical cannabis, research and strong cooperation with doctors and research institutes across the EU. This focus on evidence-based medical cannabis production makes sense not only because no single EU country legalized cannabis yet, but also because the EU medical regulations call for evidence-based medicine.

Tilray's making progress in the EU:

NEW YORK–(BUSINESS WIRE)–Oct. 26, 2021– Tilray, Inc. (“Tilray”) (NASDAQ | TSX: TLRY), a global pioneer in medical cannabis research, cultivation, production, and distribution, today announced it has been selected by the Luxembourg Ministry of Health as a supplier of Good Manufacturing Practice (GMP) certified medical cannabis products for the country’s medical cannabis program.

Following this selection, Tilray will supply a variety of its pharmaceutical-grade medical cannabis products, including extracts and dried flower with different degrees of THC and CBD for patients with varying medical conditions. These prescription-based medical cannabis products will be administered to qualifying patients in Luxembourg under the supervision of physicians.

..but also in Germany:

On July 7, 2021, Tilray announced the completion and shipment of the first successful EU GMP-certified medical cannabis harvest grown in Germany for German distribution.

Tilray is recognizing the strong opportunity which poses itself in the EU, see:

The European Union, which has nearly twice the population of the U.S. and where Tilray already has a very meaningful presence, represents a powerful growth market, and could potentially be a $1 billion business for the Company.

If you made it this far, you can see the focus shift onto the EU of this bullish thesis very clearly. Here's why:

The circumstances

Legalized world population

The amount of countries legalizing cannabis is growing strongly. As of today, 181.5 million citizens of this planet have legal access to recreational cannabis.

Blue: Legalized, Red: Illegal, Orange: Illegal but decriminalized

While medical use of cannabis is widespread, legal recreational use concentrates mainly on north america and south africa.

Global legal cannabis market

This graph from June 2021 goes to show that the global legal cannabis market is set for growth and this is not considering new countries legalizing recreational cannabis use. Well guess what, these numbers are about to skyrocket:

The catalyst

Germany’s likely next ruling coalition is closing in on a deal to legalize cannabis for recreational use, the strongest signal yet that long-awaited growth of Europe’s marijuana market is gaining traction.

Negotiators for the Social Democrats, Greens and pro-business Free Democrats are hammering out the details, including conditions under which the sale and use of recreational cannabis would be allowed and regulated, according to people familiar with the talks, who asked not to be identified because the discussions are private.

Jep, right. EU's largest country by citizens will be legalizing cannabis in the next year. The new coalition, especially the Greens pushed for it during the last election and it will be reality soon. What that means is that the legalized world population will rise by 80 million, around 40%!

This week's Reuters survey stated that the cannabis legalization in Germany opens a market of $5.34 billion per year and creates 27,000 new jobs.

Looks like the cirumstances are set for cannabis companies, but why do I choose Tilray?

The "thing"

Do you guys remember this dude?

Joschka Fischer, "sneaker-minister"

Right, that is former german foreign minister and vice-chancellor Joschka Fischer. Left-wing militant in his youth, later on the leading figure for the German Greens. Fischer told media already in the 90's that he consumed cannabis with a positive outcome ( 😀 ). And it is this ex-politician who began advising large companies in 2008. Fischer was famously involved in the nabucco pipeline project and is known to have his late life financed by those big companies he advises.

Well, guess who is one of ten members of Tilray's 2018 foundes international advisory board?

https://preview.redd.it/70jvwihdui081.png?width=330&format=png&auto=webp&s=5cc6073740f1828fbc870db9a52da05f671d7960

Joschka Fischer.

It's Joshi's party that will be back in the government after 2005 that is the legal factor in legalizing recreational cannabis. It might be possible that the federal department controlling the cannabis legalization process might go to the Greens. Favoritism is not seldomly heard of in Germany's politics. That's why I am really bullish on Tilray.

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