The Surprising Part of Tilray's Business That Drove Most of Its Growth Last Year

Tilray Brands (NASDAQ: TLRY) has become much more diverse in recent years. It's become more than just a cannabis producer, as acquisitions in beverages have significantly broadened its opportunities and grown its operations. It's also been expanding into international markets.

Last week, the company reported its year-end numbers for fiscal 2026, and what was surprising was where the bulk of its revenue growth came from. It wasn't from beverages or even from the Canadian cannabis market. Instead, its distribution business was responsible for the vast majority of its growth.

Image source: Getty Images.

Tilray's distribution business grew by 21% last year

Tilray has four main segments, including beverages, cannabis, distribution, and wellness. It's largely known for being a cannabis producer, and it's been becoming a bigger player in the beverage industry due to acquisitions in recent years. Investors may overlook its distribution business, as it may seem less exciting, since it centers on the sale of pharmaceutical and wellness products in overseas markets, with the German-based CC Pharma being a key part of that. But it was the distribution business that generated much of Tilray's growth last year.

The company's net revenue totaled $915.5 million for the fiscal year ending May 31, which was up 11% from the previous year. While it achieved growth across all of its segments, the biggest increase was easily in its distribution business, which remains its largest. Revenue of more than $327 million in that segment grew by 21%, whereas its other business units generated just single-digit growth.

CEO Irwin Simon says the company is poised for further growth and that "Across Europe, we have built one of the industry's most comprehensive medical cannabis and pharmaceutical distribution platforms."

Is Tilray Brands stock worth buying today?

Tilray's stock has been rising in recent days, as the results have led to some increased bullishness. However, it's still down close to 50% since the beginning of the year. The growth is encouraging, but what's disappointing is that its beverage business grew by just under 6%, despite being a key focus for Tilray in recent years.

Plus, this remains an unprofitable business, as Tilray incurred an operating loss of $63 million during the fiscal year. Due to its ongoing challenges, investors may still be better off avoiding the cannabis stock, as it has a lot of work to do before it can prove it's a safe investment to hang on to.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.