Tilray Brands is using a 70% probability of federal marijuana legalization in valuing a multimillion-dollar investment tied to the former marijuana company MedMen, according to its latest quarterly filing with the U.S. Securities and Exchange Commission.
The filing, submitted October 8 for the quarter ending August 31, discloses that Tilray maintains an option to acquire a 68% ownership interest in SH Acquisition for just $1 if marijuana becomes federally legal. Despite the nominal purchase price, the company values the option at approximately $4.36 million, using financial projections that incorporate the 70% legalization probability.
The assumption is part of Tilray’s financial valuation model rather than an independent forecast of federal marijuana policy. The company previously disclosed the same 70% probability in earlier financial reports, and the figure remained unchanged in its latest filing.
The investment originates from Tilray’s involvement with MedMen, which entered insolvency proceedings in 2024. After MedMen exited receivership in January 2025, substantially all of its remaining assets were transferred to an entity owned by secured creditors, including SH Acquisition. Tilray subsequently exchanged its MedMen convertible note for an option to acquire a majority interest in SH Acquisition following federal legalization.
Although the probability assumption remains unchanged, the option’s estimated value has declined considerably. Tilray previously valued it at $8.16 million before reducing that estimate by approximately $3.8 million during the quarter ending February 28, 2026.
According to the company’s financial disclosures, that reduction resulted from changes to its discounted cash flow model following restructuring activities. Expected cash flows from retail operations were eliminated, leaving the option’s remaining estimated value attributable entirely to projected revenue associated with brands.
The latest filing classifies the investment as a Level 3 financial asset, meaning its valuation relies on significant assumptions that cannot be directly verified through observable market prices. Its $4.36 million valuation remained unchanged between May 31 and August 31.
Importantly, the option is contingent on federal marijuana legalization, which is distinct from the ongoing effort to move marijuana from Schedule I to Schedule III under the Controlled Substances Act. Rescheduling alone would not constitute full federal legalization.
Tilray’s continued use of the 70% assumption offers insight into how the company accounts for potential changes in federal marijuana law while retaining a conditional investment connected to MedMen’s remaining assets.
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