Tilray CEO breaks down the future of the cannabis industry

Tilray CEO Irwin Simon talks with Yahoo Finance's Julie Hyman on the integration of Tilray and Aphria thus far, and his vision for the company and cannabis industry heading into a post-pandemic world.

Video Transcript

- But first, I want to talk about another segment of the market that has sort of been memeified before. It's been a popular area with consumers, with retail investors. I'm talking about marijuana, the business of pot, and it looks like it could now get a big boost from Congress, this year, if-- this is a big if. --if legislation to legalize weed on the federal level is passed. So far, those efforts have fallen short of expectations.

But even if the Feds dither, states are moving ahead, of course, with their own legalizations. That is potentially good news for companies, like Tillray, if it moved to the national level. I spoke with the company's CEO, Irwin Simon, and he, remember, was a founder of Hain Celestial, the natural products company. So we talked about his pivot, and his model there, and how he's applying it to cannabis.

IRWIN SIMON: You know, I was the founder and CEO of the Hain Celestial Group, which you and I talked many times on. It was a roll up in the natural organic food, personal care, and protein industry. And when I started Hain in 1993, there was not a lot of investors or consumers that knew about natural, organic, and all the benefits for it. And Hain grew into a $3.5 billion company, and at the height, close to $7 billion market cap.

And today, that's all we hear about is the whole food industry, today, is natural, organic, clean ingredients, GMO free. So now, let's revert to the cannabis industry. You know, when you hear cannabis, you think of marijuana. You smoke weed and everything else negative that went along with it, but that industry, too, has changed dramatically.

When you think of cannabis, you think adult use, and what it ultimately does from relaxation from giving you a little energy high, et cetera, and cannabis, also, used in lots of different medical formats and medical reasons. CBD, THC is also used in multiple drinks today, so I see a lot of similarities. But I'll come back and say this here. The cannabis industry in the US is over $100 billion industry.

You know, the natural organic food industry was about a $60 billion industry, so the cannabis industry is a much bigger industry, a much bigger opportunity. My playbook here is to create the largest cannabis company that's built around consumer brands, and those brands will be built around adult use. It will be built around medical cannabis. It will be built around drinks, edibles, and food.

- And you guys already have a pretty impressive market share in Canada. What needs to happen? What are the inroads in the US, but also, what legally needs to happen for you guys to expand and grow market share in the United States?

IRWIN SIMON: So number one, today, as you said, we have approximately 14% plus market share in Canada with the objective to get to a 30% share, and that's both in the adult use and the medical cannabis world. In regards to the US, we don't do anything in cannabis today in the US. We don't touch any flower. We don't do anything, because cannabis is not legal in the US from a federal standpoint.

We do sell Sweetwater Beer, which is a great beer. And we do sell Manitoba Harvest, which is hemp infused foods. Until legalization does happen, we cannot touch the plant and not touch anything in the US as were both a NASDAQ and Toronto listed Stock Exchange company. But with the Schumer bill and the Booker bill that's in place that's been proposed today, I see over the next 18 to 24 months that cannabis in some format will have legalization.

And what does Tillray do? I think, as we look at what companies are out there, do we look at having options on them to buy at once the legalization happens? Do we have some type of relationship with them? The answer is yes, and that will give us the opportunity to be a player in the US once legalization does happen.

- And do you see yourselves-- how do you see yourselves competitively versus the companies that are already based in the United States in states, for example, where we've seen legalization?

IRWIN SIMON: You know, I step back today. We participate. We're one of the largest market share growers in Canada. In regards to Europe, we're one of the largest companies today that process and distributor medical cannabis. And we do have a drink business and a food business.

We have a strong balance sheet. In regards to legalization happening in the US, I think we will be ready to partner by when that does happen. But right now, there is very little I can do other than on an option or potentially partner with someone when that does happen. And that keeps us a NASDAQ listed company and a Toronto Stock Exchange company, which allows us to have a different shareholder base.

You know, we, today, trade from a liquidity standpoint, 20, 30, 40 million shares a day. And that's the difference, because we don't do anything with the US. But trust me, when legalization does happen, we will be ready one way or another to be a part of it.

- You mentioned the shareholder base, and that brings me to sort of the unifying theme behind the companies that we're going to be talking to, which has to do with retail ownership, retail interest in the company. And we've seen sort of different approaches that CEOs and leaders have taken to this. How are you thinking about the retail investor community, and how much you want to sort of court them directly?

IRWIN SIMON: So Julie, I love to hug my shareholders, and I love to hug my customers, consumers, and today, also, my employees when you can. In regards to our shareholder base today, almost 80% of our shareholder base today is a retail shareholder base. And I love it because, they're sophisticated. They're educated investors.

In regards to technology, they're very smart, and they're consumers of our products. And they put their money where their mouth are, and they've invested into Tillray. So very much so, I am a big fan of retail shareholders. And I was one of the first CEOs that came out there and said, you know, welcome, investor, welcome, retail investor.

With that, on the other hand, and Hain and other public companies that I'm involved in, having the institutional shareholder is something that's very, very important. And today, probably-- somewhere around-- and, again, approximately-- 20% of our shareholder base, today, is institutional shareholders. And institutional shareholders can own Tillray shares, because, like I said, we don't touch the client through the US.

And that is one of my jobs is to get out there and continuously bring in the big institutional shareholders to be investing Tillray, and taking them through our story, and our strategy, how we're going to grow this company, what we plan to do if legalization does happen, where medical cannabis is a big part of our business, where, ultimately, cannabis infused foods are a big part of our business. So yeah, I would love to go up to Boston and be visiting a lot of those shareholders in New York that are big institutional shareholders.

- When it comes to retail shareholders, have you gotten creative or rethought at all how you communicate with them in terms of technology, in terms of social media, et cetera?

IRWIN SIMON: Listen, it's a whole new world for me, how I communicate with them. It's almost like how I communicate with my kids every day is the way I communicate with my retail shareholders. So yes, from a social media, I'm out there, trying to talk to them every day. As a main stock, we're out there, getting the information out, and from a digital standpoint, getting messages out.

You know, we're in the midst right now of looking for our shareholders to approve additional shares. Because when we did the reverse merger with Tillray, there was no shares left within the company. And it's important to us to have additional shares to do acquisitions, you know, ultimately, with US legalization in place. You know, I'm out there almost every day, whether it's telephone messages, whether it's video messages, making sure we get out there and get that right message to our shareholders.

Unfortunately, they may be a shareholder today, and they're not a shareholder tomorrow. So keeping up with your shareholder base can be somewhat difficult, but you've got to get out there and communicate to your shareholders. You have to talk to your shareholders. And you know, I will come back and say, they are educated in regards to what you're doing.

- That was Tillray CEO Irwin Simon on his relationship with investors.