Justin Bieber partners with Palms to create 'Peaches' cannabis line

Yahoo Finance’s Karina Mitchell reports on Tilray’s Q1 earnings, Justin Bieber’s partnership with Palms, and outlook on the cannabis industry.

Video Transcript

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ALEXIS CHRISTOFOUROS: Welcome back. Canadian cannabis company Tilray reported first quarter results today. And the news did not exactly leave investors flying high. Yahoo Finance's Karina Mitchell here now with those details and also here to talk about a new marijuana product on the market that, from what I hear, Karina, is actually catching fire right now.

KARINA MITCHELL: Yeah, absolutely. And we'll get to that in a second. Thank you so much. We'll start with those Tilray earnings because they came in earlier today. And they were a bit of a mixed bag.

So cost savings actually improved thanks to its merger with Aphria earlier this year. But net losses widened, 34 million as opposed to 21 million a year ago. But net revenue actually saw a jump. It was up 43% to $168 million, not quite what the Street was looking for at $172 million but still a decent amount, and driven in part by a 38% growth in cannabis revenue.

So we spoke to the CEO, Irwin Simon, a short while ago. And here's what he had to say about the results and growth.

IRWIN SIMON: At the end of the day, hey, you've got to put a stake in the ground. And with that, how do I take this company to the next level? And you heard what I said before. We're only a three-year-old industry in regards to adult use being legalized in Canada.

JARED BLIKRE: Well, it is a volatile time in the industry. But that's not stopping some celebrities, at least one, trying to light up the sector. Enough bad weed puns out of the way, Karina. What's the scoop on this?

KARINA MITCHELL: I wrote that bad pun. So yeah, Justin Bieber, a big name celebrity, is actually jumping into the fire. He has partnered with a California company called Palm to sell a line of pre-rolled joints, cannabis joints. It's called Peaches, aptly named after his hit single which makes mention of marijuana. Perhaps that's where the collaboration came about.

It's now available in four states, so California, Nevada, Massachusetts, and Florida. The company says that it wanted to get on board and launch this thing now because it wants to destigmatize marijuana and make it more approachable. So this is something that Justin Bieber's been really vocal about, the fact that he uses it, that it's helped him. In fact, he recently did an interview with "Vogue." And I want to read you a quote that he said. And I'll read to make sure I get it right.

"Weed was something that I felt people tried to make me feel bad for enjoying. But I've now found a place in my life for weed products that have been beneficial in my human experience."

So he is certainly not the first person, celebrity to pair their name with marijuana products, right? Seth Rogen actually launched a brand called Houseplant earlier this year in March. And when it first launched, the website crashed because it was so popular.

And I don't know about you guys. I don't know what your musical tastes are. But singers like Snoop Dogg and Willie Nelson, long had a taste for cannabis and have associated their names with those types of products as well. Guys, back to you.

ALEXIS CHRISTOFOUROS: For sure. So then, who's the target audience here exactly with this product backed by Justin Bieber? And also can you give us an idea on pricing?

KARINA MITCHELL: Yeah, so interesting. So they are targeting novices, so first-time users and casual users. As a parent with a 13, almost 14-year-old, I'm a little bit concerned about that part of it because Justin Bieber is such a big name. And when I looked on the Instagram and Stories at their ads, they look really innocuous as part of a healthy lifestyle.

But be that as it may, moving over to pricing, when I looked on the website, it looks like it's $50 for a pack of seven. There are various different flavors. You can also get mini-packs for $22. And then you can also get single joints as well, plus shipping and handling. So it seems like it's pretty affordable.

I want to just point out that part of the proceeds, part of the profits from this go to community organizations. One of them is called the Last Prisoner Project, which advocates for criminal justice reform based around drug policy. So try to make a profit, but also trying to have some principle as well.

JARED BLIKRE: Well, Karina, I guess the next question is why now? I mean, we saw a lot of hype at the beginning of the year with the change in administration. And then we saw some action in Congress kind of fizzle out. I think at the time, most people were saying this is going to be a multi-year process. But where are we right now?

KARINA MITCHELL: So fair statement, right? There is a lot of volatility in this. But we have seen some movement. We have seen some advancement as well. And just in the Tilray product, we saw revenue up 43%.

And then also this week we've seen a bump up in some other big names, Canopy Growth as well, Sundial, another big name on the back of earnings from Aurora, another Canadian cannabis company which reported earlier in the week. And actually, their results were better than expected, not perfect, still a lot of red ink. So we saw year to date, sales have dropped 20%. But that's still comparatively better than some of its peers because Canopy Growth, I've said year to date sales are down about 45%. So when you compare it relatively, not too bad.

Also, they've made a pivot into marijuana for medical use applications. That's something that the Tilray CEO spoke about as well. And year over year, they've seen growth of 9%. That was enough to make the stock pop when results came out on Monday. It was up 20% on the day. Yesterday, I looked. It was about 10%. Today when I looked earlier on, it was up about 7%. But still, tremendous growth there.

Another thing that's giving it a bump up is Pennsylvania just announced that it is making a push to legalize marijuana as well. So now we have, for recreational marijuana legal in 19 states, including DC. That makes it available to about 140 million Americans, according to the latest census. Obviously, not everyone uses it. Not everyone is at that age. But it is still available to a huge number of people.

And you've seen so much cannabis growth. You've seen the products left, right, and center. Everywhere you go, cannabis is in something. So there is tremendous growth. Tilray is at 43%. Canopy Growth is expecting 40% to 50% growth by 2023 and EBITDA profitability by the first half of next year. There's also been legislative process as well that's helping things along.

ALEXIS CHRISTOFOUROS: All right, certainly more to come from that sector. But thanks so much for that round up, Yahoo Finance's Karina Mitchell.