Investors tend to be wary when looking at companies operating in the cannabis sector. That’s partly because, when it comes to producers like Tilray (NASDAQ:TLRY), the volatility such stocks have already seen over their short life spans has been incredible. Indeed, today’s rather muted move in TLRY stock after a major announcement is a bit of a shock in this regard.
The big announcement investors are focusing on today is that Tilray has officially decided to take over the remaining 57.5% equity stake in Truss Beverage, a subsidiary of Molson Coors Canada (NYSE:TAP).
Let’s dive into what investors may want to make of this major announcement today.
TLRY Stock Steady, as It Ups the Ante in Beverages
Tilray had already committed significant capital to this beverage brand, with the hope of launching THC-based beverages that become mainstream. In the Canadian market, where Tilray is primarily focused, Tilray will certainly have a great opportunity to test out what works and solidify its core formulations for the day when (hopefully) cannabis, and associated products, become legal for recreational use in the United States.
Tilray cites some rather interesting numbers in its press release. Notably, the company states, “[i]n Canada, with over 10.6 million2 potential consumers remaining untapped, cannabis beverages are almost $100MM3 at retail.” Now, it’s hard to check the math on those exact numbers. And it’s also unclear what the exact price tag will work out to for Truss at the end of the day. Tilray did spend $85 million on eight other beverage brands from Anheuser-Busch (NYSE:BUD), so this will certainly add to the company’s running today.
For now, Tilray’s big bet on cannabis drinks is an intriguing one. While I’m not yet sold that it will ultimately pay off, it’s very clear that the company believes in this strategy. We’ll have to see how everything pans out.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
