Cannabis Round-Up: Tilray Reports Quarterly Results, Nebraska Adjusts Proposed CBD Tax Rate

Tilray's latest quarterly results disappoint

Tilray released financial results for its third fiscal quarter of 2024 on Tuesday (April 9), reporting US$188.3 million in net revenue. That's up 30 percent year-on-year, but lower than analysts expected.

The company's alcohol net revenue surged by an impressive 165 percent year-on-year and accounted for approximately 80 percent of Tilray’s total net revenue increase. The rise was primarily driven by the acquisition of new craft brands.

In contrast, Tilray's cannabis net revenue experienced relatively modest year-on-year growth of 33 percent, fueled primarily by its January 2024 acquisition of Truss, a beverage company known for its non-alcoholic cannabis-infused beverages, and by its June 2023 acquisition of HEXO. In total, the company's cannabis net revenue was US$63.4 million.

Tilray’s financial report also highlights declining distribution net revenue, which sank by 13 percent year-on-year, coupled with a 1 percentage point decrease in profit margins. This contributed to a loss of US$0.12 per share, and the company no longer expects to generate positive adjusted free cashflow for its 2024 fiscal year.

It has also lowered its adjusted EBITDA guidance to US$60 million to US$63 million for its 2024 fiscal year. In early 2022, Tilray had an ambitious goal of achieving annual revenue of US$4 billion by the end of this year.

Management has attributed the company's results to delayed cash collection from various asset sales, signaling that profits are still anticipated, but will likely materialize later than initially anticipated.

Nevertheless, shareholders appear unimpressed with Tilray's performance. The Q3 report came out before markets opened on Tuesday, and NASDAQ-listed Tilray shares began the trading day 18.53 percent below the previous day’s close. Shares had fallen a further 2.61 percent by the end of the day, and had hit US$1.82 by Friday’s (April 12) close, down from a US$2.59 price point at the beginning of the week.

Nebraska lawmakers reduce proposed CBD and hemp tax rate

Nebraska legislators have amended a bill to reduce a proposed tax rate hike on CBD and hemp products.

The originally proposed rate of 100 percent was met with backlash, with critics saying that level was too high and would make products unaffordable. Prior to this legislation, CBD and hemp products had no established tax regulations.

Last month, lawmakers in Nebraska gave preliminary approval to a large tax act that came with a series of tax rate increases, including the 100 percent tax rate on CBD and hemp products, as part of a broader effort to generate US$182 million in new revenue and help offset high property taxes for residents.

The initial proposal was met with criticism and backlash from retailers and consumers alike, as well as senators such as Democrat Anna Wishart and Republican Julie Slama. All argued that the tax rate was too high, making the medicinal products unaffordable. In light of those comments, it has been cut to 25 percent.

“The 100 percent tax was unworkable for CBD companies in our state,” Wishart told Marijuana Moment. “They were concerned it would drive them out of business. In talking with representatives from a group of CBD companies in the state, I worked with them and other senators to negotiate the tax down to 25 percent.”

This compromise aims to strike a balance between the need to generate revenue for the state and the concerns businesses and consumers have about the affordability and accessibility of CBD and hemp products, which have no intoxicating effect and are primarily used medicinally or in textiles.

It remains to be seen how the new tax rate will impact the market for CBD and hemp products in Nebraska if the bill is passed; however, the amended bill represents a compromise that seeks to address the concerns of all stakeholders. A final reading and vote is expected next week.

Workers at Eaze Technologies plan to strike on 4/20

Cannabis workers represented by the United Food and Commercial Workers Union are preparing to strike against Eaze Technologies and its subsidiary Stachs, a cannabis delivery service. The strike is scheduled to occur just before April 20, which is internationally regarded as an unofficial “holiday” celebrated by cannabis users and is one of the industry’s most important sales days, if an agreement can’t be made when negotiations pick back up on April 16.

The planned strike is a response to stalled contract negotiations and a rejected proposal on March 19. Workers have been advocating for improved wages, benefits and mileage reimbursements, but have been unable to reach a deal with the company over these key issues, leading drivers and depot workers to vote to authorize a strike on April 2.

Eaze CEO Cory Azzalino defended his company’s position, stating in an interview with MZBizDaily that Eaze has never earned a profit. “This is not the case of old industry hoarding profits,” he said. In the April 2 announcement authorizing the strike, the union argued that profitability shouldn’t come at the expense of fair compensation and benefits.

“Our proposals are perfectly reasonable; we just want to be able to pay our bills on time,” said Ron Swallow, a Van Nuys depot delivery driver and member of Local 770’s negotiating team.

“Eaze/Stachs’s billionaire financial backers have been getting richer off our labor while company management has cut hours, raised health insurance premiums, and eliminated security officers. Cannabis delivery depots are not the safest environments for drivers, who carry a lot of cash and product," he added.

The situation highlights ongoing tensions between labor and management in the cannabis industry, as employees seek better working conditions and living wages in a growing sector with unique, industry-specific challenges — such as shifting legal landscapes, complex regulations and significant tax burdens.