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Tilray makes the richest deal yet to enter the US CBD market

Marijuana company Tilray Inc. announced its most expensive acquisition so far this Wednesday, and agreed to spend over $ 300 million on a company claiming to be the largest hemp food manufacturer in the world.


TLRY, + 0.71%

agreed to buy Manitoba Harvest for $ 419 million in cash and $ 317 million in cash and stock to boost the market for CBD products in the United States strengthen. According to executives, Tilray expects to launch CBD products in the US this summer.

After the adoption of the US Farm Bill, which legalized industrial hemp and canceled CBD from the Drug Enforcement Administration's list of controlled substances, cannabis operators in Canada in the US have done angry business to operations south of the border expand. Canopy Growth Corp.

CGC, -2.46%

WEED, -2.75%

stated its intention to make substantial investments in New York and Aurora Cannabis Inc.

ACB, -1.70%

ACB, -1.61%

also began to acquire hemp goods. Cronos Group Inc.

CRON, + 1.50%

CRON, + 1.81%

has not yet introduced any hemp operations in the US

Do not miss: Everything You need to know about CBD, the non-intoxicating elixir of cannabis, which is not yet completely legal –

While the Brightfield Group has said the hemp-CBD market in the US By 2022, it could reach $ 22 billion Tilray boss Brendan Kennedy does not believe that anyone has enough data to formulate realistic projections.

"It is impossible to know at this time whether this is an exact number or not," Kennedy said in a telephone interview with MarketWatch. "What I know is that it's a great opportunity. When I think about hemp and CBD, which come from hemp, it seems to be the hottest ingredient in the natural food industry, throughout the cosmetics, personal care and cosmetics industries. It just seems that there is a lot of interest in this particular ingredient these days. What I do not know is how realistic that figure is at $ 22 billion. See also: How Marijuana Companies Can Benefit Without Selling Pot

Manitoba Harvest's Managing Director, Bill Chiasson, has been in business for over 20 years and is the world's largest Manufacturer of hemp foods. In 2018, C $ 94 million was generated. This is almost twice as much as the analysts believe Tilray will provide for the year alone. Tilray reported sales of $ 36 million in the first three quarters of the year. Analysts expect the company to generate sales of $ 16.5 million in the fourth quarter when it reports a profit on March 18th.

Manitoba Harvest manufactures products such as cereals, protein powder and hemp oil, and the acreage has been contracted for 30,000 hectares this year. The company's hemp-based products are sold by retailers in the US and Canada. The company has contracts with Costco Wholesale Corp. completed.

COST, + 0.76%

Amazon.com Inc.

AMZN, + 1.22%

and Walmart Inc.

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et al.

In an interview with MarketWatch, Chiasson said the current plan included the introduction of a line of CBD-infused tinctures, a CBD spray and a CBD Gels provides caps. While the legality of CBD-based products in the US is in doubt, Tilray and Manitoba Harvest say the new products comply with all required federal and state regulations.

Video: How the Californian "Weed Nuns" Turned CBD into a Million Dollar Business

"We have retailers who have shown great interest in states where it's friendlier," Chiasson said that the company believes that it complies with relevant state and federal regulations.

"The [Food and Drug Administration] made it very clear that she did not want to make any allegations, certain allegations that were not tested and can not be supported anymore," Chiasson said.

Tilray buys Manitoba Harvest , legally as FHF Holdings Ltd., of Compass Diversified Holdings LLC

CODI, -0.95%

and other shareholders. Tilray pays $ 150 million in cash and $ 127.5 million in shares when the transaction is completed. Within six months, Tilray will pay another $ 50 million in cash and $ 42.5 million in shares. Tilray will also spend another $ 49 million when Manitoba Harvest 2019 reaches its performance goals.

The Tilray share gained 165% last year, like the S & P 500 index

SPX, + 0,15%

increased 1,7%. Tilray went public at $ 17, and the stock surpassed $ 200 last fall before retiring. The stock closed 0.7% at $ 77.03.

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