Tilray Brands, Inc. (TLRY) Q2 2026 Earnings Call Transcript

Brant's financial results for the second quarter fiscal year, 2026, ended November 30th, 2025. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session for analysts to conduct via audio. Now I'll turn over the call to Mrs. Beren Narada, Tilbury Brant's Chief Corporate Affairs and Communications Officer. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. By now, you should have access to the earnings press release, which is available on the investors section of the Tilray Brands website at tilray.com and has been filed with the SEC and CEDAR. Please note that during today's call, we will be referring to various non-GAAP financial measures that can provide useful information for investors. However, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. The earnings press release contains a reconciliation of each non-GAAP financial measure to the most comparable measure prepared in accordance with GAAP. In addition, we will be making numerous forward-looking statements during our remarks and in response to your questions. These statements are based on our current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect. Actual results could differ materially from those described in those forward-looking statements. The text in our earnings press release includes many of the risks and uncertainties associated with such forward-looking statements. Today, we will be hearing from key members of our senior leadership team, beginning with Irwin Simon, Chairman and Chief Executive Officer, who will provide opening remarks and commentary, followed by Carl Merton, Chief Financial Officer, who will review our financial results for the second quarter of fiscal year 2026. And now I'd like to turn the call over to Tilray Brand's Chairman and CEO, Erwin Simon.

Thank you very much, Barron, and good afternoon, everyone, and Happy New Year. Thank you so much for joining us today. We delivered a strong second quarter marked by record results and a beat against analyst expectations in the face of strong headwinds. We recorded our highest ever Q2 net revenue of $218 million. Achieving an adjusted EBITDA of $8.4 million and a reported reverse stock split adjusted EPS loss of $0.02, all while generating an adjusted cash operating income of $6 million. More importantly, the quality of our performance continues to improve. Highlights this quarter include a 51% sequential growth in the international cannabis revenue and a meaningful year-over-year improvement in both net income and free cash flow. We also continue to strengthen our balance sheet. We ended the quarter with approximately $292 million in cash and marketable securities and reduced our debt by approximately $4 million during Q2, leading to a strong net cash position, exceeding our debt by almost $30 million. In a rapidly evolving global cannabis regulatory environment, particularly in the U.S., our liquidity and balance sheet strength remains a clear strategic advantage. More than 20 countries. We are a global leader in cannabis, trusted by patients, healthcare professionals, and regulators worldwide. We are the number one cannabis producer in Canada by revenue, the fourth largest craft beer brewer in the United States, and a market leader in branded hemp wellness products across North America, where a high-protein hemp food portfolio holds nearly a 60% market share. Our Q2 results reinforces the momentum we discussed last quarter, improving fundamentals, sharper execution, and increasing leverage from our diversified global platform across cannabis, beverage, and wellness. Let's turn, we believe the industry remains early in its long-term development cycle. The decision by President Trump to federally reschedule cannabis in the U.S. represents one of the most consequential regulatory shifts that the industry has seen in decades. Thank you, President Trump, if you're listening today. And guess what? We are ready to go. We believe that cannabis rescheduling to a Schedule 3 will lead the U.S. towards a federally compliant medical cannabis framework, Consistent with our other developed international markets, Tilraya's position, we already have the operating capabilities and leadership proxy $150 million in revenue on an annual run rate. We offer over 200 medical cannabis products, serving more than 500,000 registered patients worldwide. We have participated in more than 25 medical cannabis studies and clinical trials conducted in the U.S., Canada, Australia, Argentina, and across Europe, with leading hospitals, physicians addressing conditions such as pediatric epilepsy, PTSD, chronic pain, anxiety, hemorrhoid impairment, and driving performance. These initiatives are an evidence-based medical cannabis company, and they underscore the trust placed in us by healthcare professionals, patients, and cannabis genetics system, and science further. Now, let's reach to $68 million. Our high-margin international cannabis business led the growth, increasing 36% year-over-year and 51% substantially to $20 million, marking one of our strongest international quarters to date, and we fully expect this momentum to continue as we expand our global footprint. This performance is particularly notable given ongoing permit challenges, regulatory transitions in Portugal and Germany, and continued price compression, especially in flower. I'd like to acknowledge and thank the international team for their focused execution under these circumstances. I also want to recognize our Canadian cannabis team's significant growth opportunity for us. Execution will be coordination and increased utilization at our cultivation facilities in Portugal and Germany and utilizing our Canadian facilities. Tilray operates one of the largest cannabis footprints in Europe, which will continue to expand and our advantage lies in scale and gains gained from our Canadian operation. Moving on to Tilray Pharma and our district in Germany, utilizing Tilray's pharma expansive pharmacy network and salespeople and expect to triple our medical cannabis distribution footprint in fiscal 2026. We remain on track in terms of Q2 performance 26% year-over-year and 15% sequentially to $85 million, making it our biggest quarter ever, while improving our gross margins, optimization, and looking ahead to efficiency to support its commercial expansion into 3,000 additional pharmacies. as medical cannabis continues to expand globally by utilizing insights gained through integrating our medical operations and opportunities within both the European medical market and the U.S. International markets remain one of Tilray's most compelling and reinforces leadership position. During Q2, our adult-use medical sale was $46 million, with recreational cannabis growing 6% in the quarter. Tilray continues to hold a leading market position in dried flower, non-infused pre-rolls, and chocolate edibles. Our disciplined approach to product mix, margin management, and premium pricing has supported our strategic re-entry into the high-growth segments as vapes and infused pre-rolls, with a focus on accretive margins. In Q2, we advanced our innovation pipeline with the launch of Retican Amp Live Resin Liquid Diamond Vapes, addressing consumers' demand for the full spectrum of cannabinoids strain-specific terpenes that deliver an authentic plant profile. This product combines 80% of live resin with 20% of liquid diamonds, maximizing potency while maintaining natural flavor integrity. In addition, we entered the Quebec market with vapes, with the Good Supply brand, rapidly achieving a top-three SKU position in the province while underscoring effective execution and strong consumer update. Operationally, we hit our highest quarterly volume in two years with over 5.5 million units shipped in Canada in Q2. We also completed our first harvest from a restarted outdoor cannabis grow in Cayuga, Ontario, exceeding expectations on the THC content. With this extra biomass, our cannabis cultivation capacity rises to 200 metric tons annually. This boost not only allows us to provide high-quality products at reduced cost and improve our profit margin, but also helps us expand into fast-growing markets, supplying both Canadian and international customers, including those in Europe, to meet increasing global demand. The momentum of the past two quarters reflect the trajectory of Canadian cannabis business. With the right product mix, elevate this business in the second half of 2026 and beyond. With rescheduling cannabis in the U.S., Now is the time for Canada to modernize its regulation and secure its position as a global cannabis leader, including excise tax reform, marketing flexibility, healthcare integration, and on-premise consumption. Without modernization, Canada risks becoming an exporter of raw products, while value creation, intellectual property, and long-term economic growth moves elsewhere. As a global policy accelerates, the choice is clear. Modernize Canada's cannabis regulation to support economic competitiveness, consumer education, sustainable growth, or risk being left behind in an industry Canada helped to create. Prime Minister Carney, I hope you're listening to this call. The Canadian cannabis industry has generated a significant amount of jobs, contributed billions of dollars in tax revenue to both federal and provincial governments. However, the lack of regulatory reform has resulted in Canadian producers redirecting their investments and attention towards international markets where excise tax can be circumvented. Given the declining spirits industry in Canada, excise tax should be reduced. Cannabis drinks should be permitted in liquor stores and on-premise locations. Medical cannabis sales in drug stores would lower excise tax burden while boosting overall tax revenues as the industry grows. Tax revenue totals $50 million. We continue to make progress executing our integration and optimization strategy. We deliver $27 million in annualized cost savings in the first half of the year and remain on track towards our $33 million target. We're making meaningful progress in improving performance. However, there's more to be done as we continue to integrate our brands, streamline operations, and optimize processes. We acquire brands with the understanding that significant improvements and comprehensive turnaround would be necessary, a process that is currently underway through our integration plan. We recognize this transformation will take time. And while we have not achieved all our objectives, we are on track and encouraged by the positive momentum gained so far. We look forward to the up-and-coming spring product resets with our retail partners and the introduction of some of the new innovations in the market. These changes are anticipated to have a positive impact on revenue in the fourth quarter. Our outlook may seem bullish, but conviction is essential for success, which remains our primary focus, revitalizing the craft beer category, making beer fun again, bringing people together, fostering meaningful connections, and generating long-term value for our shareholders. We've established brands, breweries, a major distribution system. Beer is here to stay and not going anywhere. Tilray aims to expand its regional, national, and global presence through strategic partnerships with leading U.S. and international brands. We expect to share more about this in the future, but we believe these partnerships validate the strength of our platform and our strategic vision. This approach also position us for future opportunities should cannabis THC drinks become federally legal in the U.S. We're ready to produce and sell, as we're currently operating a leading THC beverage operation across Canada with over 45% of the THC beverage market share. Regarding our U.S. hemp-derived THC business, we continue to offer Fizzy Jane Happy Flower Hemp-derived THC beverages in 5-milligram and 10-milligram formats through nationwide retailer partnership. Distribution foods, major wine, liquor, grocery outlets across the country. While regulatory changes may affect HDD9 products after 2026, we anticipate compliant participation under new federal laws if it happens. We're also pursuing international growth by expanding our beverage business into new markets worldwide, We expect to leverage our future strategic partnerships. Our strategy for beverages abroad is evolving, with an emphasis on craft beer and non-alcoholic drinks, including energy beverages that meet the demands of consumers in this expanding sector, where brands such as Highball, our clean energy drink, Liquid Love, our sparkling water brand. Highball is set to launch in the U.K. in Q4, with expansion plans also underway for the Middle East and Africa. Beyond non-alcoholic beverages and energy drinks, we continue to explore opportunities to build on our global craft beer segment. Tilray recently participated in the American Craft Beer Expo in Japan and gained valuable insight, which the team will pursue in the future. Rounding out our beverage strategy, we're also focused on expanding our non-alcoholic beverages in the U.S. and across international markets. Our recent innovations, including non-alcoholic beers under Montauk, 10 Barrel, and our non-alcoholic ready-to-drink canned beverages and distilled spirits, including Mach 1. Within the Spears category, despite market challenges in Q2, we focus on enhancing our commercial strategy, resulting in a 9.2% increase in depletions across vodka, bourbon, and gin, with vodka leading by double digits for the quarter. While the Broncos seasonal release sold out rapidly, our ongoing efforts remain focused on expanding product distribution to additional states and beyond. With five years' experience in the beverage alcohol industry, we remain confident in our future trajectory as we continue to enhance operational efficiency. Now turning to our wellness business, we generate a revenue of $14.6 million, driven by a strategic focus on value-added innovation, including high protein, super seeds, breakfast products, better-for-you snacking, and the continued success of our highball clean energy drinks. Within our ingredient sales business, we've expanded our range of offerings in hemp protein, hemp oil, helping us further develop our business in North America and Asia. Our hemp food business remains fully insulated from proposed hemp THC regulation, as these products contain zero THC and are broadly distributed across mainstream retail. We are confident in Tilray's trajectory for the second half of fiscal 2026 and beyond. With a diversified, scalable platform, improving fundamentals, strong liquidity, regulatory tailwinds developing globally, Tilray is well positioned to capitalize on the next phase of growth across cannabis, beverage, and wellness products. Thank you to our shareholders for your continued support and confidence in Tilray's long-term strategy. I will now turn the call over to Carl to walk through our financial results in more detail. Carl, are you ready? Thank you, Irwin.

Before I begin, please note that we present our financials in accordance with U.S. GAAP and in U.S. dollars. Throughout our discussions, we will be referring to both GAAP and non-GAAP adjusted results, and we encourage you to review the reconciliation contained within the press release of our reported results under GAAP with the corresponding non-GAAP measures. This quarter, we are reporting record second quarter net revenue and strong year-over-year improvements in profitability, and we are reaffirming our full year 2026 adjusted EBITDA guidance. Net revenue for the quarter was a record $217.5 million. Revenue growth was primarily driven by strong results in our international operations, both international cannabis and Tilray Pharma. Additionally, Canadian adult use revenue grew year over year. Cannabis net revenue increased year over year to $67.5 million during the quarter, driven by a strong 36% increase in revenue from international cannabis and a 6% increase in Canadian adult-use cannabis reinforces our view that Q1 results were temporarily affected by the timing of import and export permits. As a result, Q4 2025 and Q2 of this year provide a more accurate reflection of our ongoing performance expectations for the duration of the fiscal year. With the continued growth of international cannabis, we deliberately chose to scale back supply into the Canadian wholesale market in the quarter and redeploy that supply along with new growth into the higher margin international cannabis markets over the remainder of the year. Beverage net revenue for the quarter was 50.1 million dollars. Beverage revenue was impacted by category-wide headwinds in the craft beer segment and our own portfolio optimization efforts under Project 420. We're skew rationalization and margin focused in revenue to help mitigate industry trends. These up-cut mix with consumer preferences, which we expect to benefit beverage revenue and gross margins, $2.6 million, based on our strategic focus on value-added innovation and the ingredient channel, which we are addressing through targeted initiatives is 26% year over year to $85.3 million based on our focus on competitive pricing, the prioritization of high margin SKUs and favorable impacts from foreign exchange. Business will continue to complement and strengthen our international cannabis segment as we grow both in tandem. In terms of contribution, cannabis revenue accounted for 31 percent of revenue beverage revenue was 23 percent distribution was 39 percent and wellness accounted for the final seven percent 57.5 million six percent while margins increased in cannabis distribution and wellness segment negatively impacted the gross margin for the quarter one percent this quarter at least from last year We are confident that the ongoing implementation of Project 420 will deliver significant improvements while also actively working on additional cost savings to improve overhead utilizations, as well as SG&A overhead utilization, and $33 million in annualized cost savings from Project 420 by the fourth quarter of 2026. positioning our beverage segment for long-term success. The increase to 39% compared to 35% last year. The increase was due to a greater proportion of sales being generated in the higher margin international markets. Increased sales in lower margin price competitive 13% up from 12% last year while continuing to grow top-line revenue. to 32% from 31% as we successfully managed input costs and enhanced operational efficiencies. Adjusted cash operating income is $6 million, which excludes the non-cash impacts of amortization and stock-based compensation. Net loss for the quarter was $43.5 million, a 49% improvement year-over-year compared to $85.3 million per share. It should be noted that EPS was impacted tenfold by the reverse stock split and has been reflected in both periods. $0.4 million last year, $3.5 million compared to $40.7 million last year in cash used in operations was almost entirely related to reductions in working capital, and marketable securities of $291.6 million, $0.8 million in digital assets, approximately $4 million in the prior quarter to a net cash position of almost $30 million at the end of the period. During the quarter, we also completed our ATM program in the market, execute on strategic opportunities, and take advantage of the changing regulatory landscape. and we intend to work to further strengthen our balance sheet throughout the remainder of the year. Finally, strategy and our opportunity for 2026 adjusted EBITDA guidance of 62 to 72 million We will now be conducting a question and answer session.

If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Thank you. The first question comes from the line of Bill Kirk with Roth Capital Partners.

Please proceed.

Hey, good afternoon, everybody. On the intoxicating hemp ban for November implementation, Is there anything, Erwin, that the industry can do to try to help improve the regulatory outcome? Is there any way to kind of extend the grace period, reverse the ban, carve out particular categories? Like, what can you do or what can the industry do to get a better outcome there?

Good afternoon, and thank you, Bill. Great question. As you know, this, for us, was a growing business, and there is a lot of demand for these products. and we are working with some congressmen senators lobbyists to either extend the deadline or to change some of the regulatory that would have a regulated amount of milligrams whether it's five or ten milligrams and to be sold on a national basis and i tell you so far i have a really good feeling because you know we're talking to the different associations other than Senator McConnell and whoever backed him, there's no one out here against this and thinks this is something that should be banned.

Thank you.

And then the other thing, Bill, just the other thing, I mean, there's a lot of jobs that will be lost if this happens, which is something very important, too.

Yeah, for sure. Sure. Carl, you had some comments about holding back supply and shifting it into international markets. Am I hearing that right, that that would mean sales that could have been in this quarter simply come later? And is there a way to quantify how much was held back?

What I said was that we held back from the Canadian wholesale market at lower pricing than what we did in the prior year. And so last year, we did about $5 million. balance sheet that we could have European markets over the next six months of this year.

So it's just region sales, sell it into Europe and get much higher margin for it than selling it into the wholesale market where we don't get the margins and in some cases we're even selling it to competitors. So that's what it is.

Okay. That makes sense to me. Thank you. I'll jump back in the queue.

Thank you.

Thank you. Our next question comes from the mind of Robert Moscow with TD Securities. Please proceed.

Hi, this is Victor Ma on for Rob Moscow. Thank you for the questions. Two for me, please. First, I wanted to ask about Canadian adult use cannabis. Growth in the quarter was about 6%. How much of that was volume growth versus price mix? Did you gain market share in the quarter?

And then second, can you give a little more color on what drove the substantial increase in distribution sales was there any time benefit that was realized in the quarter thank you so number one absolutely there was not price um you know some of it came from new distribution of anything british columbia that ultimately hurt us and we did gain a little bit of share not a lot in the quarter so uh it's it's demand i think there's lot we did in you know in different markets a lot of our new products started to roll out and uh so that that was the big reason from uh from you know our growth having supply and i think just you know the team you know has done a great job this is the highest quarter in us in selling of units 5.5 million units that we sold in the quarter so um again um if anything you know throughout the rest of the we saw lots of price compression i think the good news is we're not seeing that price compression right now but we're seeing demand continuously grow and we're seeing you know all the totally different brands growing in the marketplace and again what i'm talking about is all our products, it's our flowers, our pre-rolls, our edibles, our vapes, our infused vapes, and our drinks. In regards to CC Pharma, listen, I think, you know, CC Pharma has been part of Tilray, you know, since 2019. And trying to figure out what is the right position is one of our largest business. And, you know, the European team, and with the growth and the opportunities in germany have realized a couple things number one they're selling into pharmacies today we're using the cc pharma team to sell cannabis also into the pharmacy and also to deliver the other thing is is this here we're able from our buying power and you know get better margins and demand for regular medicines and we're seeing some great growth it's the biggest quarter we've ever had with cc pharma and some of the most profitable quarters we've ever had so we're looking at how we really take this business for online we're looking at how we're going to expand this business and take this model into other countries and again it's how we utilize the sales organization of cc pharma or now named tilray pharma and using that organization to sell more and more cannabis into the drugstores that it sells into.

Got it. Thank you.

Our next question comes from the line of Aaron Gray with Alliance Global Partners. Please proceed.

Good evening. Thank you for the questions. First one for me, you mentioned the expectation for Tilray Global Medical to approach $150 million, I believe. So just any color you could provide maybe on the timing of that expectation. And then you also mentioned some commentary briefly regarding potential regulatory changes in Germany, as well as pricing pressure. So could you help to maybe quantify how big a risk you're seeing from each of those potentially for 2026?

In regards to, listen, I think from an annualized basis right now, we're on a run rate for that $150 million, and that is both Canada and international markets. okay and you know the majority of that is coming from international markets um in regards to you know regulatory change um not seeing and not concerned with regulatory changes in europe and germany and i think if anything um you know we like what has ultimately committed the german government. And in regards to, you know, demand, we see more and more demand. As far as price compression, and you heard what I said before, and this is where Canada better watch out. You look at a lot of the Canadian LPs, there's a lot more than Canadian LPs, there's Israeli companies, there's a lot more companies selling product today into Germany. But Tilray has been in Germany since 2019 2020 with Tilray Medical we are the only one or one of the only ones with a grow facility there and we work very very closely with the doctors in Germany you heard what I said before about having Tilray Pharma where we are vertically integrated from our grow with our salespeople and have our own distribution piece there so yes a lot of product coming into Germany which forces price compression but what they're going to realize is the quality of product you get what you're paid for and i think that's what important is they recognize that the tilray medical products

stand for quality looks like we finished about mid single digit growth for 2025 so what's your expectation now for 2026 talked about some of the strong volumes there um but it does seem like volume growth, you know, has tempered a bit despite pricing pressure stabilizing for the Canadian market. So I wanted to hear more about your expectations for growth in the Canadian market and if a slowdown in growth also led to your decision to shift some of that product to international. Thanks.

Well, first of all, it didn't slow down in growth. I had a 6% growth and I had the highest quarter ever in selling units, okay? You know, I think one of the things we're looking continuously looking at is how we grow this to more and more profitable business and we can sell tons of wholesale product you know that's considered growth but we're not going to do that but you know what we're looking continuously at is how we're coming out with added value products and premium products and today we have a 50 share you know on our drinks which continuously is growing and the demand in that marketplace. We also have the highest share of flower in the marketplace. We sell over 80 million pre-rolls. We sort of backed away from the bank category because of the margins and we're not making money on it. So I see the categories from us, if I get mid to high single digit growth, I'll be very, very happy in the Canadian market. Now with that, I got to tell you, and Blair's on the phone and he can jump in here anytime. I have seen some of the best lineup of new products coming out that this company has ever had. And I think that's going to help. New products are key. The other thing is, listen, Porter and that British Columbia had a strike. And I think if other Canadian LPs decide they want to sell product in Europe is just going to be supplied. Tilray today has close to 7 million square feet of grow in Canada and has the ability to grow 270 metric tons. I think the number in the quarter is we grow close to 200 metric tons. So we have plenty of supply. And not only that, is we have supply an ample you know product available to ship internationally which is we're not paying excise tax and much you know much higher margins for so the opportunities are there for us um canada is a small country but uh you know it's a country where cannabis is is legal you know from a recreational is from a federal standpoint is the only country in the world and there's more and more users are seeing the benefit of buying cannabis by going into federally legal cannabis stores.

That's helpful color. Thanks for that, Erwin. I'll jump back in the queue. Thank you.

Thank you. Our next question comes from the line of Pablo Zionic with Zionic and Associates. Please proceed.

Thank you and good afternoon, everyone. Look, let me start with CC Pharma, maybe you can give more color on that business. I think in the past you said that you reached 13,000 pharmacies. Now you're talking about tripling your distribution reach. I'm trying to understand that better. And also, you know, if the new regulations in Germany stop delivery, your CC Pharma reach could be a big asset in terms of pharmacy reach. Would you be willing to also sell other people's products besides Tilray brand through CC Pharma?

Thanks.

So number one, we've owned CC Pharma for since 2019 Pablo and it was finding the right way to operate this business and originally we acquired it as part of tenders and we've been a part you know of the german um we have now changed a lot within cc pharma where we've ultimately modernized we've put money into technology there we've taken labor costs out of there we've been able to you know buy medicines and regular medicines from you know some of the pharmaceutical companies at much better prices and made some big investments and i'll tell you you know that is a big is we're out there buying medicines um and making sure we're buying them at the right price and selling them at a lot higher margin so we have focused on that business but back to your point is today we have the ability to go into more and more pharmacies and cc pharma artillery pharma has its own sales organization and you're not you don't see today go through cc pharmaceuticals or you know medical cannabis business uh internationally so there is a big focus to use that sales organization to sell more and more um cannabis medical cannabis in germany um and with that with the regulations and everybody has to go direct to a pharmacy it can't buy online there's you know bigger opportunities for us because more you know patients have to visit the pharmacy. You know, the second question is, would I sell other, you know, companies' products? You know, great question. We're in the business to sell and make profit. But again, you know, why would they, why would we want to sell someone else's products if we can deliver what the needs are for patients? But again, some patients may want some other competitors' products, and it's something we should look at, you know, from a standpoint, does it make sense for us to carry some other products? I don't know. And that's not something we've looked at, but it's something we definitely should look at.

Okay. Thank you. And then just to follow up in terms of beverages, obviously this quarter, you had very strong performance in cannabis, but, you know, a steep decline in sales in beer and profit margins. Maybe just Just give more color in terms of what is it that has not worked there. You talked about positive momentum, but the numbers don't show that momentum. And why put so much hope on just the spring resets? I mean, is it just about that? I mean, more color would help. And then just long-term, a reminder about your confidence that the beer business really fits your cannabis strategy longer term. Or they just play together and we should think of them as a diversified portfolio anyway.

I diversify business portfolios. And if you look at most companies, some have food, some have personal care, some have beverages. You know, you look at Pepsi, they have snacks, they have food, they have drinks. You look at other companies, you know, they have personal care, they have food. So I think it's important to be a diversified consumer package whose company, which we are. and we're, you know, Tilray brands. I come back and look at, you know, we got in the beer business in late 2020, COVID came along, you know, where our first acquisition of Sweetwater and then, you know, multiple acquisitions. It's taken us time to integrate these businesses. We went from only one plant to 10 plants. Now we're down to eight. We went from only one brand to 18 brands. We went from probably being the 10th or 11th largest, you know craft brewer now down to the fourth largest craft brewer so there's a lot that's happened five years and with that there's been a lot of integrations and these brands that we bought from abi and from molson's they were not some of the best performing brands at the time and it took some time to turn them around so yes i have a lot of confidence listen beer is not going away beverages is not going away and just like cc pharma here we are from a vertical integrated business we have manufacturing we have brands we have a distribution we have an infrastructure sales people and it is taking probably some more time and the other thing is at the same time you know the industry has had its decline but i'll tell you what as you come back and see a lot you know potentially will happen in regards to delta 9 and hemp infused drinks and who are they looking at to be the leader in that is till ray because of our beverage business and our cannabis business i say this and i'm not making projections but if i could sell cannabis infused drinks in the u.s tomorrow if i you know look what i have a 50 share in canada and i multiply that you know from a 10 times what I would have here it's a half a billion dollar business for us here and someday we're going to be able to sell drinks in the U.S. infused with something and whether it's CBD and cannabis in regards to you know President Trump new rescheduling in regards to drinks that will get approved by the FDA for for you know whether it's for anxiety for pain for sleep etc so the infrastructure is there for future opportunities which is important but to the point we're in the beverage business today we're in the beer business we're in the energy drink business we're in the water business we're in you know vodka seltzer's business um and i'll tell you what the other thing is is here there's a lot of companies talking to us involved to get us involved with different aspects of beverages because of what we have and how we're vertically integrated. So yes, am I totally, you know, doing a dance with our results today coming out of there? No, but do I feel good about what we will do with this business and what we'll do with these brands? Absolutely. And what our strategy is, unfortunately, it just is taking a little more time. And if you go back and look at the big companies, Molson's, ABI, you know, Constellation Brands, they weren't created within five years. And it's, you know, basically five years and we're number four within the craft beer business. A lot of business, a lot of brands have gone away in the craft beer business, which gives more and more opportunities. So I am real bullish on the beverage business. And if you look in the supermarkets today and you look, you know elsewhere beverage is the biggest category out there and i think probably the big thing we are not just depending upon the resets that are happening gaining share gaining share on premise gaining share in general and that's what i'm you know excited about that's great color thank you look if i may i'm going to squeeze one more if you don't mind uh in your but just a short answer In your press release, you talk about U.S. federally rescheduling cannabis, but I think my understanding and most people's understanding would be that if they reschedule, it will still be a state-by-state program.

It will not be federally rescheduled, but I guess your interpretation that it will be federally rescheduled, and I think that's a big distinction. Do you want to just share some color on that, but just briefly?

You know, our plan is what I've said, if a reschedule, what we're focused on, and I think a lot of other companies are focused on recreation, we are focused on medical cannabis. And our plan is to leverage the infrastructure and expertise and know how that we've developed, that we got $150 million business in Tilray today. And, you know, with that, our $300 million distribution platform is something that we utilize in Europe. And how do we ultimately do that here? And, again, engage, you know, with the outreach of the government, with the FDA, and with our working with hospitals, working with research, doing clinical studies. And that's what we're looking to do there in regards to our U.S. entry into Tilray U.S. not looking at it today of how we do state by state from a recreational standpoint and ultimately what are we going to do and we have so much research in pain anxiety you know cancer related drugs cancer anti vomiting drugs PTSD and taking that science and taking those and taking our genetics and strains and working with hospitals and potentially strategically aligning with a pharma company to execute that within the U.S. is what we're looking to do.

Thank you. Thank you.

Thank you. Our last question comes from Rodrigo Gomez with ATV Capital Markets. Please proceed.

Hi, thanks for taking my questions. Just the first question, just go back to the risk scheduling comment there, you know, with potential rescheduling in the U.S. I'm just curious, does that change the way you see potential investments in the state legal cannabis businesses, like you've done in the past with Madman?

It doesn't anything with the state. But, again, as I said, in research, Tilray is committed to investing clinicals. working with the FDA, the DEA, is coming up with approved cannabis drugs and sold for some of the conditions that I mentioned before. But it's not, you know, state by state where we're looking at recreational. We are totally looking at this from a total medical standpoint.

Got it. Thank you. And then just a second question, international cannabis. Could you help us understand, you know, outside of Germany, what are the main international markets you have right now? And do you anticipate any other international market where we could see some sort of regulatory change near-term this year that could lead to growth like we saw in Germany since April 2024?

So markets, there's the UK markets. We're looking at oils for France and Spain. um and i will tell you this here without going into names and countries there's a lot of stuff happening in the middle east in regards to working with cbd and thc from a middle east standpoint there's some stuff in and uh testing going on in india in regards to hemp and hemp infused thc products. So again, and I will say this here, and that's why I thank President Trump from the rescheduling standpoint. Rescheduling cannabis from a Schedule 1 to a Schedule 3 has opened up the eyes of a lot of other countries here, and I think that's what was important too. Once the U.S. did it, there's a lot of other countries now are saying this stuff is not taboo. It's something that's really benefited and can be really helpful in a lot of different diseases and can be very helpful as a medicine.

Thank you very much.

I'd like to pass the call back over to management for any closing remarks.

Thank you very much, operator, and thank you very much for everybody joining us today. As you can see, there's a lot happening at Tilray, and as a diversified consumer packaged goods company that today sells products into the recreational cannabis market in canada sells medical cannabis in canada sells drinks in canada sells beverages in the u.s spirits and our hemp infused our hemp foods our wellness products and then our international products with uh our international medical products and our tilray pharma so there's a lot within tilray today there's a lot of science there's a lot of research there's a lot of genetics that we're doing and as a five six year old company today that's really pulling this all together and there's no one out there today that is diversified like us invest in research we're able to invest in trials we're able to invest in clinicals today so you can't look at us today as a recreational cannabis company you can't look at us as just a beer cup and you got to look at us today as a consumer company different ways to help bring people together and that is some of the stuff we're doing at the end of the day as you can see what we've done this quarter in regards to our profitability for our shareholders and again you know it's been five years and putting this together piece by piece and there's a lot to do the question asked by Pablo in regards to our beverage business yes there's a lot to do in the acquisitions that we've done and one of the proofs is here look at the acquisitions we've done on cannabis as we put these cannabis facilities and brands together took out costs integrated the businesses and we're seeing you know the performance of that today it's no different we really only got into the international canvas business over the last year or so and that's on the run rate to be a hundred million dollar business so there's a lot to do within tilray there's a lot of great assets within tilray whether it's facilities whether it's brands whether it's distribution whether it's know-how and there's a lot of ai coming into tilray today i know there's times you're frustrated it and there's times probably i'm frustrated more than you are but i do see a good path with a lot that's happening coming together i gotta tell you we deal with a tough regulatory environment out there we pay some of the highest excise tax in canada and i hope prime minister carney heard me how important this industry is for the canadian market the jobs that created the tax dollars and we don't want to see this run away from Canada. I commend President Trump for rescheduling. He was the first president that really took this on. Everybody else sort of ran away from it. And it's up to us now to show what this really can do. So thank you very much for getting on our call today and Happy New Year to everybody.

This concludes today's teleconference. You may disconnect your lines at this time.