Shares of Canadian cannabis company Tilray Brands (TLRY 1.46%) jumped as much as 5.1% early Tuesday before paring those gains. At the close of trading, the stock was holding onto a gain of 1.1%.
Tuesday’s move came after Tilray announced the acquisition of another U.S.-based business on Monday. Investors also may be anticipating a boost for marijuana-related businesses after the U.S. election, as five more states have cannabis legalization questions on the ballot.
Tilray announced Monday that it had bought New York-based craft brewer Montauk Brewing. Terms of the deal were not provided, but Tilray said it expects the business to be accretive to its adjusted EBITDA. Montauk, which Tilray says is the No. 1 craft brewer in the metro New York area, joins Atlanta-based craft brewer SweetWater Brewing in Tilray’s portfolio. Tilray acquired SweetWater for $300 million in late 2020. It subsequently added a pair of smaller California craft beer brands — Alpine and Green Flash.
The company also owns spirits maker Breckenridge Distillery and hemp products company Manitoba Harvest in the U.S. Tilray hopes to leverage the distribution and sales infrastructure of these companies if marijuana is legalized in the U.S. at the federal level. Tuesday’s midterm elections feature ballot questions in Arkansas, Maryland, Missouri, North Dakota, and South Dakota for various forms of legalization at the state level.
Tilray isn’t waiting for pot legalization to grow its U.S. businesses, however.
“Montauk Brewing is an iconic brand with leading market share and distribution in the northeast,” CEO Irwin Simon said in a statement. “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.”
Investors appear to see that as a good strategy, and any further momentum toward federal legalization from the midterm elections could bode well for Tilray’s growth.