A (4:17)

We were looking forward to your appearance today and as we were walking around the office, some folks were saying Tilray Brands, isn't that the Canadian weed company? And of course you do many other things than that. So in one sentence can you tell us who is Tilray?

C (4:32)

So great question. And I get that said to me all the time. Aren't you that Canadian cannabis company? I was having a dinner with some people on Saturday night and they said don't you go to Canada all the time because you're a Canadian cannabis company? So yes, we are a cannabis company in Canada and Europe both for medical and recreational and in one sentence, we're a consumer packaged good company. You know, we have over 40 plus brands. We have multiple manufacturing facilities. We sell our products in supermarkets, convenience stores, bars. You know, we sell at cannabis stores, dispensary. So we are a consumer packaged good companies that is focused on brands and bringing people together for a lifestyle.

A (5:23)

Well, let's talk.

C (5:24)

That's more than one sentence, but sorry, it's perfect.

A (5:29)

Well, let's talk about beverages as one of those consumer goods beverage net revenue was $42.6 million in the third quarter and this year you acquired recently brewdog for around $53 million in cash. Was this a pure beverage play or are you also looking into Brewdog's physical locations and pubs throughout the world?

C (5:48)

So let's step back. Brewdog was acquired in March 2nd of this year. So there's no brew dog numbers in our Q3 results. Listen, I looked at Brewdog a few times over the past couple of years as was owned by private equity, majority of it. I always thought it was a phenomenal brand, had phenomenal distribution and representation throughout the world from a global brand and built it into really a nice niche craft beer businesses. At the times when I looked at the valuations were way too high and it was something that I thought would just out of my hemisphere when Brewdog became available because it went into an administration. It was something myself and my team really stepped into. And at the end of the day we're very fortunate to acquire the assets within Brewdog. And that assets were the manufacturing facility in Ellen, which is in Aberdeen, Scotland. We acquired originally 11 brew pubs. We acquired another five on top of that in the UK, Ireland and Scotland. We acquired both the manufacturing facility and two brew pubs and three franchise in Australia. And then we acquired the US operations which had a manufacturing brewery in Columbus, Ohio, a hotel, a brew pub, and then three other brew pubs in Ohio and one in Las Vegas. That's a 30,000 square foot brew publishing in the Las Vegas area. And then there's 18 other franchises around the world. So there's a lot that comes along with Brewdog and it basically doubled the size of our beverage business, taking it from a 200 plus million dollar business to almost a 500 million dollar plus business.

B (7:49)

So. Oh, and if you don't mind, let's dig into that a bit more and talk about one, of course the benefits of scale that you've just described, but also in terms of the rationale behind diversifying. Right, Irrespective of the standalone merits of that acquisition. And I just want to wind the clock a little back to 2023 and that's when you bought a portfolio of beers from Anheuser Busch for just under $85 million that included brands like Shock Top and Blue Point Brewing. And at the time Tilray said that this was a strategy to diversify basically to hedge against delayed federal cannabis legalization in the United States. So is buying Brewdog an extension of that strategy? Because you in fact may believe that delays will continue when it comes to federal legalization.

C (8:38)

So and just you know something about myself I've never wanted to be a one trick pony. And I think you got to diversify in life. You know, my first company I built was a natural organic food, went into personal care, went into protein and diversified. When I took over Aphria, which was a $50 million cannabis business in Canada in 2019, my first and foremost there was the focus on cannabis in the, in Canada and get that right, because it's the only country in the world where cannabis is legal, both from a federal and a medical standpoint. You know, depending upon the US and not seeing rescheduling happening, not seeing legalization and the US being the biggest market in the world, you know, I knew I had to be into other businesses in the US and what, what was an adjacency to the cannabis business? I always felt that drinks, one day, the beverage category is the biggest category, you know, within consumer packaged goods. And if I could sell cannabis infused drinks in the U.S. it would be a major business. So in late 2020, that's when I got into the beer business and bought Sweetwater Brewery. And that was really my first entry into a US business. And again, I just thought diversification, not being a one trick pony and if there was adjacency to cannabis, it would be through the beverage business. So that's why I got into the beverage business in 2020 and with that started to do a roll up by acquiring, you know, the eight Abi brands, Molson brands, Montauk and three brands on the west coast, Green Flash, Nelson's and those brands.

B (10:27)

And so you've diversified, you've always had that intention. Oh, and the way that you've done it with the Brewdog acquisition is going to be an operational lift. You've described something that does have turnaround elements to it. So what, what is the execution plan to get that potential particular part of your portfolio to a place that you feel really good about.

C (10:46)

So number one, it doubled the size of our beverage business and taking it from, you know, a business that's almost a half a billion dollars in size today, which is a good sized beverage business, you know, we'll sell somewhere between 18 to 20 million cases of craft beer around the world today, which is a lot of beer Today, between our US businesses and then BrewDog, we own about now 19 great brands around the world. So with that, what Brewdog has done for Tilray today, it got us global expansion. I did want to take my, you know, US brands into, into international markets and going in there and just starting to, you know, cultivate those businesses. And try to get in there on our own. Not an easy task. But when you have, you know, a business like Brewdog that has manufacturing, that has distribution, that has infrastructure in place and bring that within, you know, their businesses, it's going to be much easier to do. And also, you know, today with having 16 brew pubs and being able to bring Montauk or being able to bring shocked off or Highball into those is going to be very, it's going to be much easier than I had to go out there and start from scratch.

A (12:10)

Is there a chance that as regulations evolve there might be a time where you could bring in cannabis infused drinks into those pubs?

C (12:17)

Listen, I, I come back and I say this here first. I would want the US and my first and foremost is I hope from, you know, legislation that we get the whole Delta 9 situation straightened away and be able to sell cannabis and our hemp infused drinks in the US right now, where that was a business that was growing to a hundred million dollar business. And then in November this past year to get the government back open and how it got into the, into the bill, which is absolutely crazy that that stopped that. I think again there's going to be some changes there. So number one, I hope that we get changes in regards to Delta 9 hemp infused drinks in the US being sold. Number two, listen, in Canada today we sell about 50, 55 million dollars of cannabis drinks. In Canada we have over a 55% share of the market. If you took the Canadian market and took it 10 times, that's a half a billion dollar market here in the US From a standpoint. So the size and listen, let's be honest with each other. Why is cannabis, why, why is alcohol consumption down? Cannabis is the one cannibalizing this. Matter of fact, in the month of January there was more cannabis sold in Canada than alcohol. So consumers do want it. It's just again, regulation and legalization is something that got to happen here.

B (13:47)

And so why hasn't it happened? So let's talk about what happened. Last December we saw President Trump sign an executive order which directed the Attorney General to move marijuana from Schedule 1 to Schedule 3 under the Controlled Substances act, which is a pretty important step in achieving what you're hoping will happen. Nonetheless, it actually hasn't happened yet. So what, what's stopping progress from your perspective?

C (14:11)

I don't think anything stopping, but I think something called Epstein files, I think a war in Iran and you know, things like that have become priority. I still absolutely do believe something will happen in regards from A rescheduling standpoint. And something will happen in regards to, you know, medical cannabis being sold and regulated, you know, from an FDA standpoint in the U.S. you know, as Tilray

A (14:38)

diversifies, gets into the beverage business, is there ever an overhanging feeling that as we started the conversation that it is a weed stock? And you know, in, in our business and in media, sometimes I see headlines that say weed stocks went higher today. You also sometimes lean into it. You had a project for 20, we can talk about that program. Does that do anything to undermine the business or give retailers, the retail investors, the wrong perspective on Tilray in general?

C (15:07)

Listen, absolutely. And you step back and you say this here, and not only retail investors, it's institutional investors that can't hold cannabis stocks. And you know, one of the things in the UK when we bought Brew Dog, like we can't do business with you because you own a cannabis company. In regards to our banking today, how we have to ring fence everything, so absolutely makes it more difficult from a regulatory standpoint. But when I step back and I see what's happening in the cannabis world, the opportunity with cannabis from a medical standpoint is tremendous. And as we continuously do research and work with cannabis in regards what it can do for cancer patients, epilepsy, anxiety pain, sleep, in regards to replacement of opioids and medicines out there, that's what's really intriguing to me also as we see, you know, consumption of alcohol, you know, coming down, that is being cannibalized by the cannabis business here. Again, my job has been out there, and it's not an easy job, is to legitimize cannabis and that we're a pharmaceutical part of the cannabis business and even cannabis out there today, from enjoyment to, you know, from drinking versus cannabis, again, it's cannabis that goes through tremendous regulatory aspects of it and it's a product that you're putting out there that's safe. Right now, Canada is the only country in the world where recreational cannabis is legal. It's legal in, I think, 27 states within the U.S. but it's only legal within that state, has to be grown in that state, etc. So if you come back, you know, 62% of Americans want cannabis legalized. It should be. There's tremendous amount of tax dollars. Will it ever happen in the US that recreational cannabis will become legalized from a federal standpoint? I don't believe it. Will it ever happen where it's legalized from a medical cannabis? Absolutely. And it should be because there's so many medical Benefits that come from this product.

A (17:20)

Are there any companies within your industry that spend money on policy reform or lobbying in this area?

C (17:27)

We all do. And it's something that we're doing and I think that's an important part, is to get the message across, you know, to Congress, to get the message across to the President and that's why he signed, you know, the bill into place of what cannabis is doing from a medical standpoint. So, yes, it's taking much longer. You know, I've been at this since 2019. I've been through multiple administrations in trying to get the message across. But I come back and I see it from my own eyes how many calls I get in regards to different strains in cannabis from a medical standpoint, in regards to health, when it comes to all those conditions that I just mentioned.

A (18:17)

So how should investors look at your stock? We've, we see the highs when there's talk about progress, possibly in weed policy and then a drop off and an up and a down. And how do you get the word out? Or what are you telling investors about the diversification into beverages? Even though there might be some more weed smokers than there are people who enjoy beverages. Everything is changing. So what would you tell retailers?

C (18:46)

Great question. And it is frustrating. Listen, we put out incredible numbers today in regards to the growth of our cannabis business. Our medical cannabis business almost doubled, you know, internationally. Our recreational and medical business, you know, grew 8% in the Canadian market in regards to what we're putting together in the cannabis world is tremendous. And again, buying brewdog at the price that we're able to pay for it. So it's frustrating on a day like this. Today, as we put out great numbers, you know, our stock is not performing with that. So either we're not getting the right message out or people are not understanding our message. I think the numbers speak for themselves. So that's one thing that's important. But I think understanding, again, no different than what is the, what is P and G today? What is Unilever? And yes, both of those companies have spun off businesses because they get lost within the big picture. You know, is there a day that we spin off, we split this business up from a cannabis and a beverage business potentially. But right now, you know, again, and, and when I started this in 2019, we were a 50 million dollar business. To cross that 1.2 billion dollar mark and to do all this integration and build a global business is something that's not easy from a regulatory standpoint. But there is a lot of levers to pull within Tilray. That gives us optionality and it's incredible what we own today within assets, within our brands, within our grow facilities, within our manufacturing facilities and breweries, within our beer business, what we own today in regards to brewhouses and that. So there's lots of levers to pull if we want to simplify some of our businesses out there. But it's getting that scale and Brewdog will help us do that.

B (20:45)

So just the last question on that, Owen, you've just wrapped something that you called Project 420, which was specifically about doing some of that simplification that you just talked about. Right. That was one of those levers to eliminate underperforming beverage skus. So portfolio rationalization. Just give us your final thought on as you feel a CEO that you need to prioritize, leveraging some of those opportunities, optimizing the scale that you have. Are we going to see Project 420 take two on the horizon in 2026?

C (21:15)

Absolutely. And I think that's a whole thing today about optimization of the business and taking complexity out of the business today. And from a standpoint now, as we bring Brew Dog in there and we were doubling the business, there's absolute. Absolutely opportunities to optimize this business, take complexity out. And as you put these two business together from a scale standpoint, from a scale standpoint and a procurement that we're able to buy, whether it's hops, cans, ingredients, you know, now at much cheaper prices, it's going to help the business tremendously.

B (21:50)

Do you want to give us a synergy number, Owen? You can tell us what you're aiming for.

C (21:55)

I'm not ready yet because we haven't, we, we haven't got underneath the covers of everything on Brew Dog. But you know, I plan on spending a lot more time in the UK working on this business. But I'll tell you what, if you're doubling the size of your business and you cannot get, and if we got $33 million out prior, if we cannot get a good number out, then we're not doing a great job.

B (22:18)

You had it here first, Owen. Simon Toure CEO Next time we're going to come and have a pint at your office and get this, we'd love

C (22:25)

to have a pint with you and you can drink some good beer here. And it's cold, not warm beer. Okay.

A (22:31)

And I discovered Montauk is a brand I love to drink on the, on the New York City ferry. So I'll be having one of those

C (22:36)

this summer that that's right. Exactly.

B (22:39)

Well, huge thanks to Erwin Simon for joining. Let's take a break. When we come back, a spin through the headlines that have been moving the markets today. Hey John, do you ever try to help people save money?

A (22:48)

I gave my nephew a piggy bank with my face on it. Does that count?

B (22:51)

Absolutely. You and Vanguard have that in common because they help financial advisors help their clients keep more of what they earn.

A (22:57)

Low fees are a great thing. They can give Vanguard's skilled bond managers more freedom to maneuver as they pursue the best outcomes for their clients. This is a fixed income team obsessed with consistent outperformance.

B (23:07)

Go see the record for yourself@vanguard.com impact that's vanguard.com impact all investing is subject to risk.

A (23:14)

Vanguard Marketing Corporation distributor Ryan Reynolds here from IT Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plus plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do@mintmobile.com

B (23:34)

Switch upfront payment of $45 for three month plan equivalent to $15 per month required intro rate first three months only, then full price plan options available, taxes and fees extra. See full terms@mintmobile.com There it is, the closing bell, 4pm on the East coast and the market's wrapping up for the the day. We don't have a ticker tape so let's throw it over to our human ticker app producer John Stocks extended their

A (23:56)

rally into a second day with the S&P 500 up 7.10of a percent, the NASDAQ up nearly 1 and 2.10of a percent and the Dow finishing up 0.5% for the day. Some other market headlines, shares and Philip Morris International ticker PM fell more than 5% after a Reuters report that the FDA has yet to complete a fast track review process for certain nicotine pouches. What this review process means is that products that were on the market pre2022 can continue to be sold pending the FDA review, but newer products cannot be sold until they receive that approval. Philip Morris is specifically waiting on approval for new versions of its top selling Zyn product. For context, nicotine pouches placed under the lip for a quick hit are one of the fastest growing smoking alternatives globally, a market now worth around $22 billion.

B (24:44)

Well, sticking on the topic of the FDA shares and Eli Lilly, that sticker LLY gained around 4% today. And that's after the FDA approved the company's first GLP1 pill, Foundeo. Sounds like a superstar to me. The once daily pill will be available as soon as Monday. So just around the corner, and that's via its direct to consumer website, Lilly Direct. Eli Lilly CEO, told CNBC the pill is not as effective as its one weekly injection, but it is far more convenient and can be scaled globally. Well, that puts Lilly's pill launch just slightly behind Novo Nordisk, who we discussed yesterday is launching a subscription program for its pill. Shares in Novo were down about half a percent today on all that news.

A (25:25)

And finally, shares in Allbirds, great ticker bird fell over 12 today after the sneaker company agreed to sell itself to American Exchange Group, which also owns the Aerosol and Ed Hardy brands. The deal values Allbirds at $39 million, a measly 1% of its peak valuation at 4 billion. And that decline puts the market cap at around $22 million for today, short of that $39 million sale price.

B (25:50)

That's right. And I'm going to be slightly dorky here and get a little bit technical because it's not the company putting its whole self up for sale. I just want to clarify that it's actually selling certain assets, including its ip. So it is a technical point that explains, explains why the market cap of this business is actually now below that $39 million. The thing to look at here is enterprise value. So that includes debt. Orbirds has been trading at an enterprise value of around $45 million. So this drop in the share price implying to me that the assets being held on its balance sheet perhaps were more favorably valued than the amount that the acquirer is now ponying up as part of this acquisition. So a little bit of nerding out. I haven't nerded out for a while while on the show. I thought it was time to get in there. Well, let's take a look at what happened to the sneaker brand that once graced the feet of everyone from Silicon Valley executives to former President Barack Obama. Well, there are many brand missteps along the way, so I didn't remember. John, do you remember the launch of the see through wool leggings?

A (26:46)

Oh, I do. I couldn't understand. You know, we know Lululemon had the same thing, that there was this product. And I wonder, does anyone look at it before they make millions of them?

B (26:54)

They're. Exactly.

A (26:55)

Because they make these products, they launch them and people could see through the wool and it was no go.

B (26:59)

I had these sort of wool flat sort of ballet shoes that I really like. So I'm curious to see if those are going to be kept in circulation, because I enjoyed that. Well, lots going on. That's it for today's Brew Markets Daily. Brew Markets Daily is hosted by Anne Berry and produced by John Criteau, Tarek Abdallatif, Avni Laroya and Emily Millian. Brittany Dotako is our audio Engineer. Booking by A.B. silver. The President of Morning Brew Inc. Is Devin Emery. Welcome back and wake up tomorrow with the Morning Brew newsletter. Tune in also to Neil and Toby on Morning Brew Daily tomorrow afternoon. We'll see you back here tomorrow, same time, same place.