February 25, 2019

Tilray Inc., a British Columbia-based cannabis cultivator, producer, researcher, and distributor, and portfolio company of leading cannabis investment group Privateer Holdings,  has made the jump into food, acquiring Manitoba Harvest, the world’s largest provider of hemp-based foods, for C$419 million (US$318 million).

Founded in 1998, Manitoba Harvest produces a wide range of hemp-based consumer products, including Hemp Hearts™, Hemp Oil™, Hemp Yeah!™ granola, Hemp Yeah!™ protein powder, and Hemp Bliss™ milk, all of which are sold in more than 16,000 retail outlets across the U.S. and Canada.

“Tilray’s acquisition of Manitoba Harvest is a milestone for the cannabis industry. It builds on the strategic partnerships we have formed with consumer brand industry leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and functional food and beverage categories,” said Brendan Kennedy, president and CEO of Tilray. “We’re excited to work with Manitoba Harvest to develop and distribute a diverse portfolio of branded hemp-derived CBD food and wellness products in the U.S. and Canada.”

Recent Windfall

It wasn’t too long ago that headlines featured Tilray, making news by providing Seattle-based Privateer, which holds a 76 percent stake in the company, with a multi-billion dollar windfall.

Based in Nanaimo, a town in Vancouver Island, Canada, Tilray grabbed the spotlight among cannabis startups by listing on the Nasdaq, allowing U.S. investors and hedge funds access to its stock. By doing so, Tilray, which had revenue of $20 million last year, has surpassed Canopy Growth to be the largest cannabis company in the world, reaching a valuation of $12 billion in May, and surging to more than $20 billion amid a sweep of volatility.

When GAI News spoke with Kennedy in 2018, he noted, “This year, the cannabis industry will get even more global. Most people who operate in this industry think myopically about the opportunity in terms of their own niche or corner of the world. We don’t see it that way. We recognize that we are in the midst of a worldwide paradigm shift.”

Off the List

With the passing of the 2018 Farm Bill came the legalization of the industrial production of hemp in the U.S., opening the door for the influx of investment capital and the opportunity for vast market expansion.

By removing hemp from the list of controlled substances and legalizing its production, the Farm Bill will be the catalyst to turn what has been a boutique activity since 1937 when the Marihuana Tax Act of 1937 made the possession of cannabis and hemp illegal, into a business that has the potential to generate revenues of more than $20 billion per year by 2020.

Although not the same plant, hemp has long been conflated with marijuana for decades (hemp does not contain the levels of THC that marijuana does). Through the Farm Bill’s removal of hemp from the Controlled Substances Act, it effectively shifts all regulatory oversight of the crop from the Drug Enforcement Agency (DEA) to the U.S. Department of Agriculture (USDA). And although regulations will remain in place governing its production, it is important to note that hemp will now be treated as a mainstream commodity crop, and its growers will be entitled to the protections afforded under the Federal Crop Insurance Act.

With such a positive market horizon, Tilray and Manitoba Harvest plan to increase both companies’ revenue by leveraging Manitoba Harvests’ established distribution network, and its experienced team and manufacturing capabilities including two high quality BRC AA+ certified manufacturing facilities. And while the deal will expand Tilray’s product portfolio into the natural foods category, and give it access to Manitoba Harvests’ expertise in working with cannabinoids and cannabidoil (CBD), it also will be able to capitalize upon Manitoba’s significant sales and distribution networks.

“We are excited about being an important part of the growth strategy for Tilray,” said Bill Chiasson, Manitoba Harvest CEO. “By leveraging our combined strengths and capabilities, we will be able to accelerate our mission of transforming consumer health through the power of hemp.”

Once the deal is completed, Manitoba Harvest will operate as a wholly-owned subsidiary of Tilray, able to leverage Tilray’s position in the global cannabis industry and its strategic partners. Together the two companies will work to develop innovative and new CBD wellness products and hemp-based food products.

-Lynda Kiernan