Tilray Just Made a Massive (Backdoor) Bet on CBD

All it comes down to is that the smartest folks in the cannabis industry are trying to grab their stake of the $2 billion CBD market.

On February 20, Tilray Inc(Nasdaq: TLRY)  announced an acquisition plan for Manitoba Harvest, the world’s largest hemp food company. Manitoba Harvest products are sold in over 16,000 stores in North America. The food company generated C$94 million in sales in 2018, which gives Tilray a nice boost in revenue when the acquisition is finalized.

Of course, acquiring the food maker won’t come cheap, with Tilray planning to spend up to C$419 million in cash and stock to own Manitoba.

In the long run, though, it could be worth it, and this is another reason why there has been no better time to own CBD stocks…

Tilray’s Latest Hemp Play

One way to jump in the hemp and CBD market is to start an operation and build a brand from nothing.

The other is to do what Tilray is doing with Manitoba Harvest – buy a well-known brand that is already up and running.

Each strategy is different, but the important thing to note is the smartest executives in the industry are trying to reach the same goal: domination of the global cannabis market.

And that starts with trying to control the health sector for CBD and hemp products, whether it be through food or wellness products. That’s where the real money is up for grabs, and that’s why the best CBD stocks are in our portfolio, right now.

Manitoba has signed deals with retail giants Amazon.com Inc.Costco Wholesale Corp., and Walmart Inc. If Tilray were trying to produce a hemp-based food line on its own, it could take years of product development and negotiations to get these deals. It would take even more time to get the data on what products sell the best.

Tilray gets to skip that expensive and time-consuming process, as Manitoba Harvest has been in business for over 20 years. This move exemplifies the importance of M&A at this stage of the cannabis markets.

Right now Manitoba doesn’t sell any CBD products – just hemp proteins and oils derived from hemp seed, which does not contain CBD. Tilray is betting that the consumer leap from “hemp food” to “hemp food with CBD” will be an easy one. Only time will tell if Tilray is right, but I applaud their approach.

Tilray gets to skip that expensive and time-consuming process, as Manitoba Harvest has been in business for over 20 years. This move exemplifies the importance of M&A at this stage of the cannabis markets.

Right now Manitoba doesn’t sell any CBD products – just hemp proteins and oils derived from hemp seed, which does not contain CBD. Tilray is betting that the consumer leap from “hemp food” to “hemp food with CBD” will be an easy one. Only time will tell if Tilray is right, but I applaud their approach.

Of course, there’s also nothing wrong with Canopy’s strategy of building out its own resources.

All it comes down to is that the smartest folks in the cannabis industry are trying to grab their stake of the $2 billion CBD market.

And if you’re still sitting on the sidelines, my question is, why aren’t you following their lead?

Full story at National Institute of Cannabis Investors