Simon Says, Pot Patrol, Profit & Polls

Tilray’s CEO talks strategy, California seizes $191M in illegal weed, and Kamala Harris skips the gummies while Trump’s VP spreads misinformation.

Author

Nicolas Rodriguez
October 24, 2024

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Good morning everyone! Nicolás Rodríguez here, bringing you a bowl of cannabis industry updates to kickstart your day. At Pablo Zuanic’s event, Tilray’s CEO Irwin Simon served up some nutritious insights into how Tilray focuses on profitability while keeping its U.S. strategy solid—whether rescheduling happens or not. On the enforcement side, California’s cannabis task force has seized a hefty $191 million in illegal products this year alone. And as election stress tightens, Kamala Harris lets us in on her routine—sans cannabis gummies. Let’s dig in.

Battleground Jitters: Kamala Harris Tackles Election Stress, No Gummies Involved

As polls tighten in key battleground states like Pennsylvania and Michigan, Kamala Harris admitted to waking up in the middle of the night with election stress but clarified that cannabis gummies are not part of her routine. "Not eating gummies!" she said, during a Michigan panel.

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"It's very easy for us to go out there and wholesale cannabis and not make any profit," said Irwin Simon, Tilray’s CEO, during a candid discussion with senior analyst Pablo Zuanic. Simon was clear: profitability, not just growth, is the name of the game for Tilray.

Tilray reported $200 million in revenue for Q1 FY25, reflecting a 13% year-over-year increase, while gross profit rose by 35%. Simon emphasized that rather than chasing market share, the company remains selective and strategic in its approach to the cannabis industry.

Simon was all about profitability. "It's very easy for us to go out there and wholesale cannabis and not make any profit," he said, underscoring the importance of staying selective in the cannabis game.

The CEO noted that Tilray’s diverse lineup—cannabis, hemp food, beverages, and pharmaceuticals—keeps them in the black. "Each of those businesses today is profitable," he pointed out, while also highlighting their strong balance sheet: $250 million in cash and a debt-to-equity ratio of 1.75.

Simon made it clear: whether or not federal rescheduling happens, Tilray’s got a plan. "If nothing happens—no rescheduling, no legalization—we already have a good-sized business in the U.S. in the consumer products space."

A big part of that plan? Lifestyle brands, with non-alcoholic drinks like Liquid Love leading the way. Plus, Tilray’s got 700 beer distributors and over 17,000 accounts, ready to scale their hemp-derived Delta-9 THC beverages, like Happy Flower and 420 Fizz, now rolling out in 17-19 states. "If I could sell THC-infused drinks legally in the U.S. today, I think it's a billion-dollar opportunity," Simon remarked.

With their diversified portfolio and a healthy balance sheet, Simon added, "We know how to grow cannabis… and we have the balance sheet to fund it." Shout out to Pablo Zuanic for facilitating this conversation and guiding investors through volatile times.

Photo courtesy of California National Parks Service.

Governor Gavin Newsom's Unified Cannabis Enforcement Task Force (UCETF) has ramped up efforts against illegal cannabis operations this year. Since July 2024, the task force has seized over $70 million worth of unlicensed cannabis, bringing the total to $191 million across 13 counties. These efforts are part of a larger strategy to safeguard California’s legal cannabis industry and the environment.

The task force, launched in 2022, has focused on cracking down on public health risks posed by illegal cannabis, including pesticide use and labor violations. Newsom emphasized the importance of these operations, noting over 42,000 pounds of illegal cannabis were taken off the market in 2024. Additionally, the UCETF has destroyed 162 tons of illegal products since its inception.

Despite a new Harvard-led study debunking the claim, Sen. JD Vance continues to push the narrative that illicit marijuana is often laced with fentanyl. The study, which analyzed nearly 12 million drug samples from 2013 to 2023, found no widespread evidence of fentanyl contamination in cannabis.

"Our results show no evidence of widespread fentanyl co-occurrence with cannabis," the researchers concluded. However, Vance remains undeterred, blaming Vice President Kamala Harris for the crisis, while experts suggest that the real solution is regulated, lab-tested cannabis sold through legal channels.

Legally Blocked: Arkansas Patients Left Stranded by Court and Conservative Push

In a move that leaves many shaking their heads, the Arkansas Supreme Court, in a narrow 4-3 decision, blocked the expansion of medical cannabis access just two weeks before the election. Despite being on the ballot, votes for the measure won’t be counted, all because the court deemed the amendment “plainly misleading.” This decision crushes hopes for broader access to medical cannabis cards, legal home cultivation, and the potential for adult-use cannabis if federally legalized.

Arkansans for Patient Access slammed the decision, saying, "It seems politics has triumphed over legal precedent." Patients who rely on medical cannabis are the ones paying the price. While Arkansas’ cannabis market hit $283 million in sales last year, it’s been shrinking since—leaving fewer options for those in need. Now, with conservative groups like the Family Council Action Committee actively campaigning against the amendment, it feels like patients have been left hanging by those who should be helping.

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Nicolás holds a B.A. in International Relations, an M.A. in International Affairs, and an M.Phil in Public Policy. He is a doctoral student in Public and Urban Policy at The New School in New York City. After working for the United Nations in 2014, Nico pivoted his research to studying the relationship between the cannabis industry and economic development.

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