Benzinga | Dec 23, 2021 09:37AM EST

Why Is Tilray Scaling Its Alcohol Operations? The Newest Acquisition: SweetWater To Buy Green Flash And Alpine Beer

Canadian marijuana giant Tilray (NASDAQ:TLRY) continues with acquistions, with the latest news revealing the company's SweetWater Brewery is in the process of acquiring Green Flash Brewing and Alpine Beer Co. Last Friday, Green Flash's owners talked to employees at its Mira Mesa headquarters to confirm the acquisition, which should soon become final, reported San Diego Beer News.

The news comes on heels of the Tilray's acquisition of Colorado-based bourbon producer Breckenridge Distillery. While the terms of the Breckenridge Distillery deal were not disclosed, the Toronto-headquartered cannabis company confirmed at the time that it expects the transaction to be immediately accretive to EBITDA.

What happened

Although the newest acquisition announcement has not yet been finalized, some sources say that SweetWater - the 11th biggest craft-brewing company based on beer sales volume - will move production of Green Flash and Alpine products to its facility in Fort Collins, Colorado.

Upon the completion of the transaction, it is expected that Green Flash's current ownership group, WC IPA LLC, will cease activities at the Mira Mesa brewery but will keep the company's brewing equipment as well as other assets at its headquarters.

What will happen to the Alpine Beer Company Pub in East County's Alpine community is yet to be announced, but it is speculated that the venue will be closed.

What's important to note is that while production would be moved to Colorado, both Green Flash and Alpine beers will still be distributed to San Diego County.

The SweetWater purchase of Green Flash Brewing and Alpine Beer occurs around one year after Canadian marijuana company Aphria bought SW Brewing Co. LLC in a deal worth around $300 million, reaching the U.S. Then, in May of this year, Tilray acquired Aphria together with its SweetWater Brewery, creating a company with a combined market cap of $3.3 billion.

Since then, Tilray's SweetWater Brewing Company has launched its first Canadian craft cannabis brew in the US in collaboration with Canada's Broken Coast Cannabis Ltd., but also a new and innovative non-dairy almond milk stout.

Why It Matters

The newest acquisition is part of Tilrays' plan to firmly position itself on the ground in the U.S. if/when federal cannabis legalization occurs. It is doing so via these acquisitions and by scaling alcohol brands that could offer business adjacencies and potential product distribution.

In November, the company teamed up Sweetwater brand with RIFF Cannabis launching a vodka cocktail in a can entering into the spirits category. Even though the vodka cocktail has no CBD or THC, it is part of its alcohol brand scaling and setting the stage for possible future operations across THC-infused beverages.

More specifically, at the time of Breckenridge Distillery acquisition, Tilray's CEO Irwin Simon stated: "More generally, the Breckenridge Distillery transaction is consistent with Tilray's strategy of leveraging our growing portfolio of U.S. CPG brands to launch THC-based product adjacencies upon federal legalization in the U.S. These significant, diversified revenue streams are key to delivering on our ultimate goal of industry leadership with $4 billion in revenue by the end of fiscal year 2024."

Price Action

Tilray shares were trading 5.56% higher at $7.88 per share at the time of writing Tuesday late morning.

Photo: Courtesy of Thiago Patriota on Unsplash