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Nina Zdinjak

Jim Cramer Is Bullish On Cannabis Stocks Ahead Of Midterm Elections: 'I Say Buy Tilray'

Mad Money host Jim Cramer said last week during a Lightning Round segment that now is a good time to invest in Tilray.

Responding to a caller who asked when was the right time to get back in cannabis stocks - now or after the midterms? Cramer replied without hesitation. "Now."

“I’ll tell you why now. Because, I don’t know if you saw that opioid settlement, but all that could have been avoided if this country had just been open-minded to cannabis. And I just think that Tilray Brands, Inc. (NASDAQ:TLRY) and Canopy (NASDAQ:CGC)...their time has come,” he said.

“Right now we poison people with opioids, and we are all paying the price. And that never would have happened had we been more open-minded about something that is not addictive. I say buy Tilray.”

Both Tilray and Canopy have been working recently to position themselves in case of federal cannabis legalization. Canopy recently announced it will create a new U.S.-domiciled holding company, Canopy USA, LLC, which will hold the company's U.S. cannabis investments and enable it to exercise the rights to acquire Acreage (OTC:ACRHF), Wana and Jetty.

Cantor Fitzgerald’s Pablo Zuanic said, ”CGC could be in a great position to further acquire US assets in the months ahead, with likely expanding opportunities if the 117th Congress does not pass banking reform during the lame-duck session. Indeed, CGC could be steps ahead of peers, which may have less flexibility.”

Canopy’s plan to conquer the US cannabis market, Zuanic noted, could turn out to be the biggest catalyst for cannabis stocks, much bigger than SAFE plus or a CLIMB Act.

Tilray’s Recent Strategic Move

On MondayTilray announced the acquisition of Montauk Brewing Company, the #1 craft brewer in Metro New York.

Montauk Brewing is well-known for its product portfolio, premium price point, and distribution across over 6,400 stores, including top national retailers such as Target (NYSE:TGT), Whole Foods, Trader Joe’s, Stop & Shop, King Kullen, Walmart (NYSE:WMT), 7-Eleven, Costco (NASDAQ:COST), BJ’s (NYSE:BJ), and Speedway.

The acquisition is expected to be accretive to the Company’s adjusted EBITDA.

To fully optimize the value and strength of its U.S. craft beer portfolio, Tilray also announced that it has appointed veteran beer and beverage industry executive Ty H. Gilmore to be president of Tilray’s U.S. beer business, a newly created position.

"Tilray Brands continues to strengthen our U.S. footprint and operations through investments in and growing our portfolio of leading lifestyle CPG brands that resonate powerfully with consumers,” Irwin D. Simon, chairman and CEO stated. “Montauk Brewing is an iconic brand with leading market share and distribution in the northeast. Tilray Brands intends to leverage SweetWater’s existing nationwide infrastructure and Montauk Brewing’s northeast influence to significantly expand our distribution network and drive profitable growth in our beverage-alcohol segment. This distribution network is part of Tilray’s strategy to leverage our growing portfolio of U.S. CPG brands and ultimately to launch THC-based product adjacencies upon federal legalization in the U.S.”

Montauk Brewing joins the Canadian cannabis giant’s growing U.S. beverage-alcohol segment, which already includes SweetWater Brewing Company, the 10th largest craft brewer in the nation with distribution across more than 40 states, the Alpine and Green Flash iconic Southern California brands, and its leading lifestyle bourbon and spirits brand, Breckenridge Distillery.

“We are excited to welcome Montauk Brewing’s founders Vaughan Cutillo and Eric Moss, as well as Terry Hopper, Montauk Brewing’s General Manager, to the Tilray Brands family and I look forward to working closely with Ty Gilmore to maximize the performance of our enormously powerful craft and lifestyle beverage brand portfolio,” Simon added.

Strategic and Financial Benefits

  • The acquisition is expected to deliver additional scale in Tilray’s craft beer segment as well as to position the company with a stronger footprint in the northeast rounding out our footprint across the U.S. market.

  • Upon federal legalization in the U.S., Tilray plans to take full advantage of its strategic infrastructure, operations and consumer loyal brands across beer, spirits, and snack-food categories to parlay into THC-based products and further expand its commercial opportunities.

  • Tilray Brands intends to leverage SweetWater’s existing nationwide infrastructure to accelerate Montauk Brewing’s distribution network and revenue growth.

Price Action

Tilray shares were trading 0.93% lower at $3.73 per share during Tuesday pre-market session.

Photo: Benzinga Edit; Sources:  Tulane Public Relations by Wikimedia Commons and Paul Einerhand by Unsplash

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