Tilray’s Denise Faltischek: “Constantly evaluating valuable additions to our portfolio”

Germany might serve as a lighthouse

by Moritz Förster

Tilray is already active in the Cannabis industry for a decade and after the acquisition of Aphria in 2021 one of the three licensed German cultivators (though not disclosing how much cannabis has been actually produced in the German facility). Denise Faltischek, Tilray’s Chief Strategy Officer und Head of International Tilray Brands, outlines why Germany is one of the most interesting cannabis markets – despite the fact that she doesn’t believe in a short term fully legalized adult-use market. Denise also illustrates why Canada is facing massive over-production and which ohter regions she considers as relevant. And even though Tilray seems to be happy with the current positioning in Germany, Denise admits that she is “constantly evaluating valuable additions to our portfolio” and is keeping a close eye on the German market”.

krautinvest.de: Denise, you have been in the industry for already a few years in leadership position for Tilray, you’re responsible for international strategy. What does this mean?

Denise: Yes, that’s correct. My role at Tilray Brands, Inc. is Chief Strategy Officer and Head of International.  As Chief Strategy Officer, I’m responsible for the company’s global business strategy, working with our CEO. As Head of International, I oversee Tilray’s international business which includes Europe, Australia, New Zealand, and Latin America.

krautinvest.de: Which of these regions is currently the most interesting one?

Denise: I would say Europe is the most interesting region at this time given the size of the opportunity. Within Europe, Germany is our biggest focus given its population, acceptance of medical cannabis and advanced development of cannabis regulations in the region. As cannabis regulations continue to advance in Germany, we are excited to be a part of the discussions on regulatory framework and look forward to being a part of the future growth of our industry. 

Australia and New Zealand are also interesting markets and similar to Canada in the regard that both countries have a large land mass populated by few people. While there’s growth opportunity for the medical cannabis industry in these markets, figuring out  efficient and cost-effective distribution and smart supply chains is challenging to build.

“I do not anticipate additional markets legalizing and adapting adult-use

krautinvest.de: We have been talking about medical markets. Do you see any other adult-use market on the rise?

Denise: I do not anticipate additional markets legalizing and adapting adult-use cannabis regulations at this time or in the near future and we are okay with that. Tilray Medical as a pharmaceutical business is committed to the medical market and putting our patients first.

krautinvest.de: Well, you take part in the federal adult-use market in Canada…

Denise: Yes, we do.  As you know, our business began in Canada as a medical cannabis licensed producer.  As the market evolved, so did our business and in 2018 when adult-use cannabis became federally legal in Canada, we built a new division of our company dedicated to the adult-use market.  Today, Tilray operates both a thriving medical cannabis focused business and adult-use brands in Canada.

krautinvest.de: And why do you not think, Germany won’t go the Canadian way, soon?

Denise: Compared to Canada, Germany faces more hurdles on the way to federal adult-use cannabis legalization. Other than the UN Single Convention on Narcotic Drugs, the European Schengen convention also stands in the way as Germany is part of the EU. Canada was able to make some decisions around adult-use as it is “only” a member of the UN Convention without other regulatory boundaries hindering adult-use legalization. Yet, we also see in other markets that the split of state and federal level complicates adult-use legalization, for example in the US.

krautinvest.de: In Germany around 25 tons have been imported Q3 2023, plus an estimated 1 to 2 tons produced by the three domestic cultivators. Yet only 15 tons have been distributed to pharmacies during that time. In Canada more than 100 tons are stored, a lot of product is destroyed. Some cultivators even start to grow vegetables in their facilities instead of cannabis. How challenging is cultivation in the current times of oversupply?

Denise: In my view the federal regulators in Canada made some mistakes by issuing over 800 cultivation licenses in a country with a population of 26 million people, approximately half of them not being of age and eligible for adult-use consumption. As a result, you have seen great price compression of all the available products. Companies are not able to raise money and need to generate cash to keep themselves going – maybe not always making the best business decisions and choosing to sell products at very low prices in order to generate cash.

krautinvest.de: As said, we won’t have an adult-use market in Germany. But we will have decriminalized cultivation in cannabis social clubs and allow home growing. There is still a big question mark regarding the pilot projects. Do you see any opportunity for Tilray to participate in the first pillar?

I think the 2 pillars are a step in the right direction for Germany

Denise: I think the 2 pillars are a step in the right direction for Germany, to ultimately destigmatize cannabis and move towards a fully legal adult-use market. And I also think that by reclassifying medical cannabis as a non-narcotic, this will provide easier access for patients. Hence, I don’t see Tilray necessarily participating in facilitating home growing or getting involved in the cannabis social club landscape. This doesn’t provide for a commercial opportunity yet. While at Tilray, we welcome the steps taken by the German government towards a more public health centered cannabis regulation, I do worry about decriminalization in the absence of a strong regulatory framework to guarantee quality control and clear distinction of cannabis produced under decriminalized circumstance and cannabis coming from the illicit market. In my home state, New York, we saw the same framework and it has led to a dire situation for consumers, with illicit and poor-quality cannabis negatively impacting public health.

On the model project side, I would definitely see an opportunity for Tilray to participate as it is intended to collect data for the scientific evaluation of cannabis. Providing data-based evidence for the benefits of cannabis is and will be part of Tilrays company values. Especially as an in-country cultivator, we would like to support this and are open to provide cannabis to the model projects from our state-of-the-art facility in Neumünster, Schleswig Holstein.

“I am curious to see the impact of the rescheduling as a non-narcotic on insurance approval numbers”

krautinvest.de: You also hope that numbers of patients will increase drastically and rapidly due to the fact that cannabis will be reclassified…

Denise: Yes, I do hope for it as many patients, existing and new, need a stable, high-quality and more affordable access to their medication and treatments. While I know some are saying that the medical cannabis market volume is going to increase ten times, I don’t necessarily subscribe to that. At the same time, I do think the reclassification helps destigmatize medical cannabis. It may in turn motivate more doctors that are currently hesitant to prescribe cannabis to look at cannabis as a treatment option for their patients. It may also lead to health insurances considering more and faster reimbursement of cannabis medication.  Ultimately, yes, I think that reclassification will lead to more patients. 

krautinvest.de: Plus, we currently have a debate going on that it might be that some physicians can prescribe to the public insured patients without being double checked by the insurance companies.

Denise: Indeed. The question of how the reservation of prescription and reimbursement currently affect access for patients to their treatment has been at the top of our minds at Tilray for a long time. The reclassification may lead to health insurances considering more and faster reimbursement of cannabis medication. I am curious to see the impact of the rescheduling as a non-narcotic on insurance approval numbers.

krautinvest.de: Beyond Germany in the United Kingdom, we have seen growing patient numbers. So far, we haven’t been discussing this country…

Denise: Right. It might be that the United Kingdom will achieve a similar level as Germany today in due time. If we look at the regulations in terms of access it is more strictly regulated than in Germany. Germany is the largest EU country, and many European countries are looking at what Germany does. I hope, ultimately, the German initiatives serve as a lighthouse and other countries are thereby motivated to use it as a role model.

krautinvest.de: Many business leaders of medical cannabis distributors have hoped for a legalized adult-use value chain. Compared with a full commercial legalization, the downsized 2-pillar approach many of the distributors are struggling, company valuations are decreasing. What kind of German entities would you be interested in acquiring, what assets are you looking for?

Denise: At Tilray, we are very fortunate to already work with an integrated supply chain with our two EU-GMP certified cultivation and packaging facilities in Germany and Portugal, supplemented by our successful acquisition of pharmaceutical wholesaler and distributer, CC Pharma, in 2019. To us, the current priority is to continue building out a reliable business to best serve our patients with the infrastructure that we already have in place. Nonetheless, my team and I are constantly evaluating valuable additions to our portfolio and are keeping a close eye on the German market.

About Denise Faltischek

Denise Faltischek is Chief Strategy Officer and Head of International at Tilray Brands, Inc. (NASDAQ:TLRY, TSX: TLRY).  Before joining Tilray, she served as Chief Strategy Officer at Aphria Inc. and led the Company’s global strategy, a pivotal role in establishing Aphria as a global cannabis leader. An executive with extensive consumer-packaged goods experience, Ms. Faltischek also served as Executive Vice President and Chief Strategy Officer at The Hain Celestial Group, Inc. (NASDAQ: HAIN), a leading organic and natural products company with operations in North America, Europe, Asia, and the Middle East. At Hain Celestial, Ms. Faltischek led the successful completion of more than 50 acquisitions and strategic transactions.  As Chief Strategy Officer, Ms. Faltischek collaborates with Mr. Simon on Tilray’s global strategy as the Company scales its operations internationally and explores further global opportunities as well as overseeing its acquisitions and other strategic transactions.   As the Head of International, Ms. Faltischek oversees Tilray’s international businesses.  She is also a director and the chair of the Nominating and Governance Committee of Whole Earth Brands, Inc. (NASDAQ: FREE), a global industry-leading platform, focused on the “better for you” consumer packaged goods and ingredients space.

Disclaimer: Editorial content, no investment recommendation.

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