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Tilray Signs Landmark European Shipment Deal

Noted marijuana producer Tilray (NASDAQ: TLRY) reported some news of note. On Wednesday, the company announced that it has signed a deal to ship marijuana from its growth and shipment facility in Portugal. The deal, signed with privately held German medical cannabis importer Cannamedical Pharma, is for $3.3 million worth of medical product. This will be transported from the facility to Germany.

Tilray said that it expects to complete this shipment in the fall.

In the press release trumpeting the arrangement, Tilray pointed out that it is the first such contract it's signed to ship product from the Portugal facility to Germany. The latter country is considered a key European market due to its size and its booming market for medical cannabis (recreational use is not permitted -- at least not yet).

The company said in the press release that "[t]his is a significant milestone for Tilray as we ramp up our capacity to serve international markets and generate revenue from our EU campus through the end of 2019. ... We believe our 2.5 million square feet of cultivation and state-of-the-art processing space in Europe is an important differentiator, which will enable us to reduce costs and improve margins while hedging against regulatory risk."

Image source: Getty Images.

The Portugal facility is a cornerstone international asset for Tilray, which, like many large North American cannabis companies, has global ambitions. It received a license to grow, import, and export bulk medical marijuana in Portugal in mid-2017, and its first harvest at the facility was completed this past February.

Tilray believes that Germany's legalization of medical marijuana will be replicated throughout the EU, which currently has 28 member states. Earlier this month, one of those nations, Luxembourg, said it will soon roll out legislation to sanction all forms of cannabis production and use within its borders (although the legalization process will likely take several years to enact). The country already allows cannabis for medical use.

Tilray's partner in the Germany deal, Cannamedical, was quoted in the press release as saying that "Tilray's product has passed our strict quality control standards, and we're excited to have found a partner able to deliver medical cannabis products for use in Cannamedical's own brands."

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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