One of the clearest examples of the marijuana industry’s problems is the trajectory of one of its flagship stocks, Tilray (NASDAQ:TLRY).
In November 2018, Canada was just weeks into the first phase of legalization. Investors rushed into the country’s pot companies, perhaps anticipating a domino effect in which other countries would sanction the drug one after another. That still hasn’t happened to a large extent. Meanwhile, the domestic market is facing a series of problems. To put it bluntly, an investment in Tilray wouldn’t yield much these days.
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That’s putting it mildly. A $1,000 bet on Tilray in late November 2018 on the company’s US-listed shares is said to have shrunk to just $11 at the same point in 2024. That’s a drop of almost 99%, comparable to burning almost an entire stack of money.
The Canadian cannabis industry has struggled at times from the start.
Many businesses, large and small, sprang up around the time of legalization in a country that is not very populated relative to its size (just under 39 million versus almost 342 million in the US). The slow, halting rollout of the official pot market in certain provinces — like the most important, Ontario — didn’t help either. Another negative factor is the continued existence of the gray and black markets for the drug.
To Tilray’s credit, he made an honest attempt at a pivot. It jumped into the beverage industry and bought up a bunch of American craft brewers — an attempt to be some sort of player in a business that was somewhat complementary to weed.
Still, alcohol overall isn’t much of a growth story, and Tilray continues to struggle on the bottom line. Net profits have been few and meager, with plenty of competition on both sides of the US-Canada border. Tilray’s share price is terribly low for good reason. That doesn’t mean it’s a bargain; rather, it’s probably a company you should avoid.
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