Replies to post #2684 on Green Thumb Industries Inc (GTBIF)

[FUNMAN]

This article supports Green Thumb's hopes bolstering the reasons why USA legalization is likely. The writer qualifies the legalization timeframe as "within our lifetimes". To qualify that I'm going to assume the writer is 100 years old :-)

See all of the pole data in the provided links to the graphics. - FUNMAN

All links in the article posted below work and take you to the proper graphics, or read the article at this link:

https://seekingalpha.com/article/4454442-tilray-stock-stands-to-benefit-from-a-variety-of-factors

Tilray Stands To Benefit From A Variety Of Factors

Sep. 10, 2021 2:04 AM ET

Summary

• Following their strategic merger with Aphria, TLRY is the largest commercial marijuana company in Canada.

• TLRY is lowering its costs rapidly, something important in the marijuana industry.

• TLRY is well-positioned in the event of federal legalization in the United States, as they have an established distribution channel through their subsidiaries Manitoba Harvest and SweetWater.

Thesis
Tilray (TLRY) is the largest marijuana company in Canada, with operations worldwide, including non-marijuana operations in the United States. The strong Canadian YoY growth, vertical integration, shifts in consumer behavior, and the United States opportunities make TLRY a buy at these levels.

Operations in Canada
As of writing, the entirety of Tilray's recreational marijuana business is conducted in Canada. The Canadian market does pose some unique challenges hindering TLRY's sales, but we think that TLRY will experience more favorable conditions in the future.

Since marijuana has been legalized in Canada, the biggest competition for companies like TLRY has been the illegal market.

It is estimated that despite legalization, "about 40 percent of the cannabis market share in Canada is still held by illegal producers."

This is primarily because illegal operations do not have to go through the same regulations that TLRY is held to, and therefore can offer a cheaper alternative.

The share of the market held by illegal producers is falling. We believe that this trend will continue as more previously nonusers are open to using marijuana. Here is an excerpt from mjbizdaily.com.

https://static.seekingalpha.com/uploads/2021/9/8/53115550-16311524526527414_origin.png

It is clear that as time passes, more people are open to using marijuana. These newbies are not getting their marijuana from an illegal source either.

https://static.seekingalpha.com/uploads/2021/9/8/53115550-1631152526644967_origin.png

The trend is clear. More Canadians are recreationally using marijuana, and fewer people are turning to illegal channels for their supply.

As the leading supplier of legal, recreational cannabis, Tilray is an obvious benefactor of this trend.

Growth in Canada
Covid was harsh on TLRY. They stated that over 600 stores were granted licenses but were not able to open due to the pandemic. However, despite the widespread closure of stores, TLRY was still able to post positive revenue growth on a YoY basis, speaking to the growth of their brand.

We expect their sales and market share to increase once stores open back up and TLRY products become more available.

During the question and answer session of their latest phone call, Irwin Simon shared our sentiment.

Today, we’re at about a 16% market share. And with that, if you step back for a second, and it’s aspirational, looking to basically double our market share. The Canadian market’s been almost closed for seven months. There’s numerous stores that have been built that have never been opened in Ontario. And we’re only in the third year of being legalized, and building the awareness of legalization.

Irwin later describes how they plan to leverage their size to keep prices low and the rate of innovation regarding product offerings high to keep the "little guys from nibbling at us."

We believe that TLRY has a lot of potential as Canada exits Covid, and looking at the stock's price action, the market has not realized that.

Cost Reduction
Since the marijuana industry has a relatively low barrier to entry, keeping the cost low and margins high is a must for TLRY.

They are currently working on lowering their cost in several ways.

Strong infrastructure, vertical integration
For one, TLRY controls their cannabis cultivation, processing, and distribution. Control over all aspects of production allows TLRY to enjoy lower production costs.

Strategic Aphria merger
The strategic reverse acquisition of APHA is already showing synergistic results for TLRY.

Their partnership with Aphria has already generated $35 million in realized savings, and over the next 18 months is expected to generate upwards of $80 million in synergies. Considering that their TTM operating expense is $191 million with an operating income of -$68 million, the savings from this merger could be the push that they need to generate net income.

It is working

The results of their cost-saving efforts are already beginning to show up. In 3Q21, their average cost per gram came in at $.90. In their latest earnings call, they revealed that their average cost per gram came in at $.72. The reasoning that they gave for this decrease were "improved yield, potency and cost control efforts."

This 20% reduction in cost per gram, even before the full extent of their synergies are realized, should serve as a green flag for shareholders.

US legalization

Before we address TLRY's position, let us illustrate why the US government may federally legalize marijuana in our lifetime.

Here is data from the Pew Research Center on public opinion regarding marijuana legalization.

https://static.seekingalpha.com/uploads/2021/9/8/53115550-16311465058527179.png

Source: Pew Research

As you can see, public support is growing fast and now controls a solid majority. ~2/3 of people support legalization.

The sentiment is not limited to the general population either. While there is higher support seen among Democrats, both parties favor the legalization of marijuana.

https://static.seekingalpha.com/uploads/2021/9/8/53115550-16311466241542757.png

Source: Pew Research

As time passes, it appears that support will continue to grow, as younger generations view legalization more favorably than older generations.

https://static.seekingalpha.com/uploads/2021/9/8/53115550-16311466866135712.png

Source: Pew Research

The data shows that most people want marijuana legalized, and the majority will likely get stronger as time passes.

Tilray's US position
In their conference call, TLRY stated that with full legalization in the US, they are likely to get $4 billion in revenue by 2024.

This is possible for several reasons.

They have two subsidiaries that operate entirely in the US. Manitoba Harvest, a provider of Hemp-based personal wellness foods, and SweetWater, which they claim is the 11th largest craft brewer in the United States.

Through their subsidiaries, they have experience interacting with the United States market and regulatory pressures. This gives TLRY a unique advantage over marijuana companies that lack a presence in the United States.

Marijuana in the United States is also far more expensive, which could lead to higher margins. For example, the average cost per gram in the United States is $12, whereas TLRY's average selling price per gram in Q4 was only $2.98, according to their latest conference call.

We view their presence in the US and the US market opportunity as a whole as a massive positive for TLRY.

Conclusion

Tilray is the leading marijuana producer in Canada, and its revenue is still growing at double-digit rates YoY. In addition, TLRY stands to benefit from Canada's Covid recovery, a shift in consumer behavior towards legal cannabis suppliers, an increase in the number of cannabis users, and a potential United States legalization. For these reasons, we rate TLRY as bullish and hold a beneficial long position.



Written By: Moonshot Equity Analysis
Growth, Deep Value, Medium-Term Horizon, Long-Term Horizon
Member Since 2021

Active investor. Mainly covers companies with high investor interest. Covers everything except banks. Aspiring startup founder. 6-18 month investment time horizon, will take ticker suggestions.

Disclosure: I/we have a beneficial long position in the shares of TLRY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[FUNMAN]

N.J. approves new cannabis grow site, but 24 other weed business licenses continue to languish

Come on NJ, get your act together!- FUNMAN

Updated: Sep. 15, 2021, 5:07 p.m.
Published: Sep. 14, 2021, 9:02 p.m.

https://www.nj.com/marijuana/2021/09/nj-approves-new-cannabis-grow-site-but-24-other-weed-business-licenses-continue-to-languish.html

By Amanda Hoover
NJ Advance Media For NJ.com

EDITOR’S NOTE: NJ Cannabis Insider is hosting an in-person day-long conference and networking event Sept. 23 at the Carteret Performing Arts Center, featuring many of the state’s leading power players. Tickets are limited.

New Jersey’s cannabis regulators on Tuesday moved to streamline the licensing of new weed businesses and approved another marijuana grow site — but it did not announce the recipients of some two dozen businesses that have sat in limbo for nearly two years.

The state’s Cannabis Regulatory Commission met on Tuesday evening to approve the transfer of an existing medical marijuana license, a new marijuana grow site and a system to help it process applications for new cannabis businesses.

All signal the state is gearing up for legal cannabis sales.

The commission unveiled its initial rules to guide the legal weed industry last month. That set the clock ticking down to launch sales to those 21 and older — according to the law, they must start within six months of the commission adopting its regulations.

But the commission gave no word on the 2019 request for applications to operate new medical marijuana facilities. Some 150 entities saw a review of applications paused in late 2019 due to a lawsuit. But a court ruled earlier this year that the commission could resume its evaluation and award those 24 licenses.

So far, the commission has not issued any of the new licenses. Jeff Brown, the commission’s executive director, has said licenses will come soon, but regulators have not given a date by when they will announce the new licenses.

“It is not lost on us that everyone is eager to get that moving forward, as are we,” Dianna Houenou, the commission’s chair, said during the meeting. She said the commission was working quickly to score them, but emphasized the need to “double” and “triple” check each.

Still, frustration dominated the meeting.

Travis Ally, an applicant from that licensing round, said the commission should not consider expanding cultivation for existing medical marijuana companies while so many are awaiting those licenses.

“It’s borderline absurd at this point,” he said of the delay.

Edmund DeVeaux, president of the New Jersey CannaBusiness Association, criticized the wait, too, saying it would harm small and minority-owned businesses that have poured money into the application process without seeing any returns.

“They are waiting for much anticipated inclusion in the industry that had shut them out for so long and now may see a delay in that process, which is exactly what we did not want to happen. They cannot afford to keep waiting and neither can the state,” he said in a statement. “This delay was highly inconvenient but understandable before. Now, it is totally unacceptable and the state needs to take action immediately.”

Several others criticized the commission throughout the meeting. David Feder implored the commission to shed light on the delays.

“If they’re not going to be releasing them, at least address what the hold up is,” he said.

Despite the opposition, the commission did approve a second marijuana cultivation site in Lafayette for Harmony Foundation of New Jersey, which currently grows and dispenses medical cannabis in Secaucus. The company also has planned to open two additional dispensaries in Hoboken and Jersey City, which could draw customers from New York.

Increasing the supply of marijuana in the state not only helps authorized medical patients to access cannabis, but also gets the industry closer to the legal weed sales start date in February 2022. Currently licensed medical companies can sell to those 21 and older once they pay fees and prove they have enough marijuana to support not only the 114,000 patients in the state, but a recreational market, too.

The commission also voted to transfer ownership of Garden State Dispensary to Ayr Wellness, a company with dispensaries in several states, including Pennsylvania, Nevada and Massachusetts.

Garden State was one of the original six alternative treatment centers licensed in New Jersey. It has three dispensaries in Woodbridge, Eatontown and Union Township.

And finally, the commission voted to begin using NIC Licensing, a technology platform for government entities to process business license applications. Brown said the state has been using it for other licensing needs since 2009.

“This existing state resource will enable us, the commission, to begin accepting license applications sooner than it otherwise would be able to,” he said.

The commission did not say when it would begin to accept applications for licenses, but the cannabis legalization law says it must open open a process within 30 days of adopting its initial rules and regulations. That deadline comes this Saturday, Sept. 18.

A spokeswoman for the commission did not immediately return an email seeking clarification on the deadline to accept new applications.