Top cannabis exec: Expect to see more strategic investment coming to cannabis

  • Hot off a supply deal with Canadian Nova Scotia Liquors, Tilray CEO Brendan Kennedy said he expects more strategic investments to pour into the burgeoning marijuana industry.
  • Cannabis industry value is "in the intellectual property of these other form factors and other delivery mechanisms," Kennedy said.

Hot off a supply deal with Canadian Nova Scotia Liquors, Tilray CEO Brendan Kennedy said he expects more strategic investments to pour into the burgeoning marijuana industry.

"Cannabis globally is disrupting the pharmaceutical industry, the alcohol industry, the [consumer packaged goods] industry and, to some extent, the tobacco industry," Kennedy said Tuesday on CNBC's "Closing Bell." "I definitely expect additional strategic investors to invest in the industry in the coming months."

Shares of the Canadian medical marijuana company shot up more than 21 percent on Monday, after Tilray announced it had been selected by the Nova Scotia Liquor Corporation to receive an initial purchase order for adult-use cannabis, which will go legal nationwide in Canada starting Oct. 17. Tilray gained another 12 percent after the bell on Tuesday, after reporting second-quarter earnings that pleased the Street.

As the marijuana industry matures, Kennedy sees it resembling consumer products or pharmaceuticals more so than commodities.

"While at first look, you might want to judge companies in the industry based on agriculture or growing a commodity product, that's really not what the industry is going to look like five years from now," Kennedy said. "People will drink cannabis instead of a beer ... they may eat a product in the form of a chocolate bar or an edible, or consume a pill."

"That's where the value is, it's in the intellectual property of these other form factors and other delivery mechanisms," Kennedy said.

Brendan Kennedy, CEO of Tilray, poses for a portrait.
Tilray
Brendan Kennedy, CEO of Tilray, poses for a portrait.

And Kennedy isn't the only one who sees opportunity there.

Alcohol giant Constellation Brands, which makes Corona and Modelo, announced an additional $4 billion stake in marijuana company Canopy Growth in mid-August, which Constellation says upped its stake in the company to 38 percent. The announcement follows Heineken-owned Lagunitas Brewing's launch of a cannabis-infused sparkling water, as well as reports that Molson Coors was in talks with several major Canadian cannabis companies, including Aphria and Aurora Cannabis.

"I think that you are seeing this interest from outside the industry, because so many companies in so many other industries are in desperate need of growth, and this is a high-growth industry that is emerging rapidly, not only in Canada but around the world," he said.

And as for pharmaceuticals, the Food and Drug Administration in June approved pharmaceutical company GW Pharmaceuticals' cannabidiol-based Epidiolex to treat epilepsy.

"Once in your lifetime, if you're lucky, you see an entire industry emerge from scratch, seemingly overnight — and that's what we're seeing here," Kennedy said.

Tilray stock is up more than 123 percent since it began trading at $23.05 per share on the Nasdaq July 19, becoming the first pure-play marijuana company to go public on a major U.S. exchange. Tilray, which cultivates, processes and distributes cannabis products to tens of thousands of medical marijuana patients across 10 countries, is currently valued at about $4.8 billion, according to FactSet.