TLRY'S SMOKE SIGNALS
We will have more detailed thoughts on the TLRY CEO's MACRO comments or "smoke signals," as we call them later today. With operating losses totaling over $700 million since coming public, closure of many facilities (to be asset-light lol); laying off hundreds of employees, today the market is celebrating the company generating its first positive (A) EBITDA quarter. What is the theory behind celebrating such massive destruction in shareholder value? Oh right, they soon will be entering the US Cannabis market, or will they? Will they even be competitive after they enter the US? Who will they buy, and do they have the balance sheet to pay up for a top-tier operator, or will they try to issue overpriced equity and dilute current shareholders? Yesterday TLRY reported Q4 EPS ($0.02) vs. FactSet ($0.14) and Revenue of $56.6M vs. FactSet $56.0M. (A) EBITDA $2.2M vs FactSet $0.3M, giving the company a 4% (A) EBITDA margin. TLRY 4Q Gross margin was 33.5%, only a slight improvement sequentially. The quarter benefited from 20.5% revenue growth, a significant acceleration from 0.6% in 3Q20. These operating metrics don't even get TLRY in the game when compared to US operators. Given "the mob" has control of the TLRY equity and by the association of the pending acquisition by APHA, both of these companies' stocks are uninvestable.
Legalization progress in Hawaii
Lawmakers in Hawaii voted to advance two marijuana bills this week. One of the bills is to regulate adult-use cannabis, and the other is to increase the amount covered in the state’s existing decriminalization law. Hawaii’s law replacing criminal penalties with a fine for possession of up to three grams took effect in 2020. The legalization bill will proceed to another committee, after which it would head to the full chamber. Even though Hawaii is a small state, the tourism industry may generate outsized revenues for the state if adult-use were approved.
Cannabis demographics
The following chart depicts the percentage of cannabis revenue by generation and gender. The variation by the state is relatively small. Millennial males represent the largest group, followed by Generation X males. Millennial females are the largest female demographic. The data represents adult-use spend over the past two years.
