Tilray to sell a large block of stock as it preps for cannabis reclassification

By Tomi Kilgore

Cannabis company registers $250 million worth of shares for sale, or about 15% of its market cap

Tilray Brands Inc. is getting ready for marijuana to be reclassified as a less dangerous drug in the U.S., as the cannabis company is looking to raise money through the sale of shares so it can expand.

The Canada-based company said it has filed for the sale of up to $250 million worth of its common stock, through an at-the-market equity program. The amount represents about 15% of Tilray's market capitalization of $1.71 billion as of Thursday's close.

"The timing and amount of any such sales will be determined by a variety of factors considered by the company," Tilray said.

The stock (TLRY) dropped 3.3% in recent premarket trading, on volume of 2.6 million shares.

Tilray said it plans to use proceeds from the sale of shares to fund acquisitions or investments in businesses, including potential purchases of assets in the U.S. "in order to capitalize on expected regulatory advancements or expansion opportunities."

The company said it doesn't currently expect to use proceeds for general working-capital purposes.

Tilray's ATM program comes a day after the Biden administration said it was moving forward with plans to lower the federal classification of marijuana to a Schedule III drug.

A Schedule III classification is for substances, such as testosterone and ketamine, that have moderate to low potential for dependence.

Since 1970, marijuana has been a Schedule I drug, which is the same classification as heroin and fentanyl.

A reclassification of marijuana could pave the way for increased institutional access to cannabis companies, and could provide a boost to cash flows.

When reports surfaced that a reclassification was in the works, Tilray's stock had rocketed 39.6% on April 30 to $2.47, its biggest one-day gain in three years.

It had pulled back since then, to close Thursday 14.2% below the April 30 close.

Tilray shares have rallied 10.4% over the past three months through Thursday, while the AdvisorShares Pure U.S. Cannabis ETF MSOS has climbed 8.6% and the S&P 500 index SPX has gained 5.8%.

-Tomi Kilgore

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05-17-24 0850ET

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