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Introduction

Tilray Brands, Inc. (TLRY), one of 5 constituents in the MunAiMarkets Canadian Cannabis LP Stocks Portfolio announced on their web site yesterday (June 10th) that the vote for an amendment of the Company’s Certificate of Incorporation to implement a reverse stock split of the Company’s common stock at a ratio ranging from 1-to-10 to 1-to-20 had passed at a special meeting of the company stockholders but would not be implemented until all options related to its timing have been evaluated.

What Is A Reverse Stock Split?

A reverse stock split is when a company reduces the number of its outstanding shares while increasing the price per share. Unlike a regular stock split, which increases the number of shares, a reverse stock split is often used to boost a company’s stock price to meet exchange listing requirements or improve its market perception.

What Are the Advantages Of Tilray's Planned Reverse Stock Split?

As mentioned above, the reverse stock split will:

• ensure its compliance with the Nasdaq Global Select Market’s continued listing requirement;
• and, in addition, will align the Company’s number of shares outstanding with companies of its size and scope;
• make Tilray more attractive to institutional shareholders; and
• reducing expenditures associated with Tilray’s Annual Meeting of Stockholders resulting in up to $1 million in cost savings on an annual run rate basis.

The MunAiMarkets Canadian Cannabis LP Stocks Portfolio: UP 7.5% w/e June 6th; DOWN 6.6% YTD

For comparison purposes, below are the 5 largest vertically integrated cannabis LPs (licensed producers) in Canada, by market capitalization, and how their stocks performed last week, in descending order, and YTD, along with a description of each company:

1. Canopy Growth (CGC): UP 28.8% w/e June 6th; DOWN 38.0% YTD
   • Canopy Growth has the highest market share in the Canadian medical marijuana market and, while Canopy does not own or operate U.S. dispensaries, it has set up structures to enter once legal barriers fall and strategic stakes in several American cannabis firms, preparing for a post-legalization landscape. It operates internationally with strong medical and recreational cannabis divisions and Constellation Brands (STZ) has a 9.9% stake in the company for collaboration of marijuana infused beverages.
   • Market Capitalization: $283M
2. Aurora Cannabis (ACB): UP 7.9% w/e June 6th; UP 34.6% YTD
   • Aurora is building an 800,000 square-foot, mostly automated, facility that, when complete, is anticipated to have the lowest growing costs and highest margins in the entire industry. Aurora will be ready to meet the high demands that recreational legalization will be and ready to reap the profits as well.
   • Market Capitalization: $326M
3. Cronos Group (CRON): No Change w/e June 6th; DOWN 2.0% YTD
   • Cronos Group Inc., a cannabinoid company, engages in the cultivation, production, distribution, and marketing of cannabis products in Canada, Israel, and internationally.
   • Market Capitalization: $761M
4. Organigram Global (OGI): No Change w/e June 6th; DOWN 16.1%
   • Organigram, Canada’s #1 cannabis company by market share, engages in the production and sale of cannabis and cannabis-derived products in Canada and, through its recent acquisition of Collective Project Limited, participates in the U.S. and Canadian cannabinoid beverages markets.
   • Market Capitalization: $192M
5. Tilray Brands (TLRY): DOWN 4.7% w/e June 6th; DOWN 69.2% YTD
   • Tilray remains a unique play among Canadian cannabis stock. Its U.S. strategy hinges on long-term positioning rather than short-term dispensary count as it waits for U.S. federal legalization before deeper cannabis integration. In the meantime, it has expanded its presence through partnerships and acquisitions in the craft beer and wellness industries with distribution in multiple states.
   • Market Capitalization: $420M

Conclusion

Upon implementation of the reverse stock split, Tilray Brands believes it will be well positioned for strategic opportunities and acquisitions given its strong balance sheet.

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