The cannabis industry has been in rough waters after catching a tailwind during the pandemic lockdowns.
The good times that rolled as people were forced to stay home due to lockdowns are dissipating, leaving growers and retailers with too much inventory.
In Canada, federal license holders had 19.3 million packaged units of dried cannabis. Not quite the record 21 million that was held in April 2021, but still much higher than the nearly 11 million they held at the end of 2019, according to Health Canada data.
Canada produced 1.6 billion grams of cannabis in 2021 as cultivators, processors and sellers piled into the industry.
"Simply put, our business is bigger than what we need, and we must position ourselves to better secure our path to profitability and ultimately be successful in this industry in the long term,” Chief Executive Miguel Martin said in a video message to employees.
Tilray's German Play
Germany gets the majority of the weed for its medical market imported from Canada, with licensed producers shipping 6,493 kilos of medical cannabis flower and extracts to Germany. About a third of Germany's imports come from Canada.
Tilray is reportedly the top marijuana company in Germany. But the country's share of imports has fallen since it was above 38% in 2017. Denmark accounts for 18.1% of imports, Netherlands 18%, and Portugal 11.7%. Tilray estimates it now has about a 20% market share.
"Internationally we have a vast medical opportunity beginning with Germany in addition to other surrounding and emerging legal markets we're already utilizing utilizing our expertise from Canada to support responsible regulations that will enable us to enter and build the presence in these medical markets when feasible," CFO Carl Merton said.
The company reported a 22% increase year over year in German revenue during the first quarter.
There are only three grow facilities operating legally in Germany. Tilray owns one of them.
Tilray does note that since Germany is the largest medical cannabis market in Europe there's a lot of competition coming into the market.
But the company says it is best positioned to take advantage of the opportunity due to all the work it has already put in in the country of 83 million.
But a gaffe last month could put a strain on the company's overseas plans.
Did Tilray Fumble Germany?
In September, German drug officials held a roundtable with Tilray and other participants.
Tilray sent out a press release saying that it had a good conversation with officials to "kick-off draft legislation."
Tilray namedropped Burkhard Blienert, Federal Government Commissioner for Addiction and Drug Issues, saying he and the group presented a plan for adult use cannabis legislation at the roundtable and repeated the German government's commitment to getting a first draft of a bill done in the "coming months."
But either the meeting didn't go the way Tilray presented it, or Germany is keeping its plans close to its vest, because the country is pushing back on Tilray.
“We (would) like to inform you that there is no roundtable with Tilray and the federal government commissioner for addiction and drug issues,” Blienert's spokesperson told MJBizDaily.
"The content of the press release is just not correct. We are not downplaying the meeting, because there is no cooperation and there will be none either with Tilray. On no level to be clear.”