The lack of product is giving the cannabis company a boost
Canada legalized recreational marijuana across the country last year, but suppliers weren’t quite ready. Across the country, depending on the region, only as much as 40% of the cannabis ordered was able to be delivered – in some areas, the amount was only 20%. Things may be getting better, but there is reportedly still a deficit. While this may be a problem for all cannabis companies, Tilray sees it as a problem for which it doesn’t want a solution.
Tilray is taking a unique approach to the cannabis supply problem. It is waiting for the other suppliers to increase their supplies – more than likely to levels that will result in overproduction – and then buy the supply at lower prices.
Tilray isn’t going to invest in cultivation and retail assets like many cannabis companies. Instead, it is going to focus on enhancing its branded retail products, including those through the recently-purchased Manitoba Harvest. Tilray is also going to have access to around 20,000 retail merchants and its products will be found in locations such as Amazon, Kroger, Costco and CBD, among others, due to the relationship it has with Autehntic Brands Group.
While the other producers will be scrambling with too much supply, Tilray will be purchasing at extremely lower prices, increasing its margins as it moves products out for distribution. Of course, all of this hinges on there being an oversupply with which to work, but that is a relatively safe bet.