With the COVID-19 pandemic in the rearview mirror and consumers returning to legal pot shops, Tilray Inc. is turning its attention to better competing against what its CEO describes as "ankle biters" nipping away at its market share. 

That description made by Chief Executive Officer Irwin Simon characterizes how smaller producers have been eking away at Tilray's market advantage over the past several months, the result of more than 700 licensed cannabis producers selling their wares into the crowded Canadian space. 

To keep Tilray's cannabis sales momentum going, it means enlisting an army of representatives to spread the word of its high-potency products to retail "budtenders", arguably the most influential contact for consumers' who may have no clear idea what product amongst the hundreds of options they should purchase, Simon said. 

"Consumers today want brands and they're very interested in potency and price, and if they don't know a brand, they'll just buy potency and price and say the hell with it," Simon said. 

Simon's comments come as Tilray reported its fiscal first-quarter results at a pivotal moment for the Canadian cannabis space. After nearly three years of legalization, the industry is looking for a way to re-accelerate growth as consumers are ready to return to in-person shopping at the 1,200-odd licensed pot shops across the country. 

"If you look at us, Hexo, Canopy Growth and Aurora, all together we have 50 per cent share [of the market]," Simon said. "Underneath that, you have 450 licensed producers that are all ankle biters that are taking a little bit of share away. That's what we have to contend with and make sure we're selling our products and educating budtenders." 

Tilray reported first-quarter revenue of US$168 million, an increase of 43 per cent from the prior year, while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 58 per cent to US$12.7 million. The company also reported a net loss of US$34.6 million as administrative and transaction costs from recent acquisition deals rose substantially in the three-month period. 

Analysts polled by Bloomberg expected Tilray to report US$173.6 million in revenue and US$13.6 million in adjusted EBITDA in its first quarter. 

Tilray's cannabis sales rose by nearly 38 per cent in the first quarter to US$70.4 million. That should reaffirm the Leamington, Ont.-based company as Canada's biggest pot producer despite the steep domestic competition that continues to eke away at market share for major players. 

While Tilray remains short of its 2024 goal of reaching a 30 per cent share of the Canadian market - it currently stands around 12 per cent, according to a recent Stifel report. Simon said he hasn't ruled out buying smaller producers to make up any lost ground if there are some cost savings to be made and accretive to its sales. 

"My number one priority is to make sure we hold on to our market share today. You have to eat what's in front of you and not worry about the next meal," Simon said.  

The company remains actively interested in the U.S. despite not yet being present in the THC cannabis market due to federal regulations, namely lending some of its Canadian brands for its U.S. craft beer subsidiary, and has begun discussions with MedMen Enterprises Inc. executives on sharing consumer insights, Simon said. 

"I can go trade on the Canadian Securities Exchange, but what does that get me," Simon noted. "On the other hand, the U.S. (multi-state operators) are limited to what they can do in the U.S. market. Everybody poo-poos Canada, but it's legal here."  

Simon also rebutted recent media reports and social media chatter that criticized his compensation that saw him net nearly $30 million in salary and stock awards last year. He said that he was compensated fairly for his performance since joining Aphria in December 2018 when that company was on shaky ground following a damaging short-seller report that alleged executive self-dealing and overpaying on international assets. 

"At the end of the day, shareholders have been rewarded and myself and my team should be rewarded," Simon said. "My stock is time-based I never sold a share. I continue to hold every share.

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