I have no official opinion of TLRY, but I have a bias to the short side! I also want to be long, but for reasons that are wrong and unsustainable. The CEO of TLRY, Irwin Simon, is trying to restore the glory days of the Hain and create another roll-up around Cannabis. Like HAIN, this is not going to end well; TLRY blowing up will take time however. He is currently creating a narrative around "legalization" and trying to position TLRY as a major player in the USA. He is deploying the same deceptive practice he did at HAIN and has proven he will say anything to get what he wants.
By way of background, I have documented all of Irwin's antics while he was the CEO of Hain celestial, including hiring Mark McClish the Head of training for the U.S Marshall service, who was trained in detecting lies and deceit when interviewing people. I had Mark review some HAIN transcripts, and it took him about five minutes to point out where Mr. Simon was trying to deceive investors. The same patterns of deception are evident when Irwin is talking about the future of TLRY and what he is trying to do. I don't need a US Marshall to help me this time because his lies are so blatant it's disgraceful. On 8/17/21, Mr. Simon was interviewed on CNBC about the Medmen transaction where he now controls 21% of the company. He is clearly trying to deceive investors and has outright lied to investors about Medmen and other aspects of the deal. Here are a few things he says that are blatant falsehoods:
Irwin Simon Statement: "Medmen is an iconic brand known all around the world."
Hedgeye Response: To say Medmen is a global brand is a clear deception from reality. It's not even a national brand with only 25 stores in 6 states. To say this is a global brand is far from the truth.
Irwin Simon Statement: "Tom Lynch has turned the business around."
Hedgeye Response: I guess this could be subjective, but Medmen was bankrupt and has now sold off some of the most important licenses like New York to save on costs. The company has an (A) EBITDA loss in 2Q21 of $12 million, better than the $35 million loss in 2Q20, and is not expected to be profitable until 2023. So TLRY's shareholders paid nearly 6x 2020 sales for an unprofitable and shrinking US MSO. As a group, the US MSO's are trading at 2.9x 2022 sales, with GTI trading at 5.8X 2022 sales. Mr. Simon went on to say that he sees great value in Medmen, but that again is the narrative he is preaching because the number don't lie. Thanks to Mr. Simon and his desperate need to enter the US TLRY shareholders overpaid for a US asset, but they had no choice.
Irwin Simon Statement: "Medmen is in 50% of the US"
Hedgeye Response: What? Did he even look at the deck they put out for the transaction? The company only operates in 6 of the 37 legal states.
Irwin Simon Statement: The deal "Allows for accelerated execution on previously announced growth plans in California, Florida, Illinois, and Massachusetts, as well as an opportunity for additional markets and licenses."
Hedgeye Response: This is more subjective, but MedMen does not have the balance sheet to compete effectively in any of these markets.
Irwin Simon Statement: Legalization is "around the corner."
Hedgeye Response: What does he mean around the corner? If SAFE were passed in its current form, TLRY still can't access the market given the way the law is written. Some form of legalization is at minimum April 2022, if it gets done before the mid-term elections. Legalization is certainly is not around the corner, the MSOS would not be trading down 38% over the past 6 months if it was in fact around the corner.
