It’s been several months since I wrote about Tilray (NASDAQ:TLRY). The last time I did so, the company was weeks away from completing its merger with Aphria. Like many investors, I thought this would be a catalyst that would reverse the slide that TLRY stock had been in since early in the year.
I didn’t know what to expect, but I was surprised to see that TLRY stock was trading for just over $10 for the past week. And the issue seems to be a recurring tale; a company and a sector that has a lot of promise that is a long way from being realized.
Then came news on Tuesday that a former Bacardi executive had been named as president of Tilray Canada, and the stock rocketed up almost 16% to $11.66 a share.
But don’t expect that to last.
Since the cannabis bubble burst at the end of 2018, bullish investors have clung to the hope that cannabis will be legalized on a federal level in the United States. Three years later, those bulls are realizing that the wheels of government move slowly. The only question is how long they are willing to wait.
Closer But Still Far Away
A recent Wall Street Journal article quoted Tilray’s CFO Carl Merton as saying, “We believe that the U.S. is closer to legalization than it ever has been, but the process will take time.”
I’ll admit to laughing a little when I read that. He’s not wrong. However, I have to admire the positive spin he’s putting on the situation.
It would appear that Merton is looking at a July update from the Cannabis Training University that used almost that exact language in saying, “Federal legalization of weed has never been closer.” But if that’s the case then Merton needed to read a bit further. I’ll tell you what I mean by that in just a moment. There is a chance, but it’s narrowing by the day.
I’ve been firmly in the camp that U.S. federal marijuana legalization is a question of when, not if. One year ago, when it was apparent that the Democrats would take control of the executive branch and the House of Representatives for sure, I was more inclined to jump on the cannabis hype train.
But as opposed to a year ago, I’m not sure how close the country is to legalizing marijuana. The progressive majority in Congress has certainly tried to emulate a tech startup in theory. They’re moving fast and breaking things. But the problem is that the wheels of government were meant to grind slowly and right now, the governing party can’t seem to get out of its own way.
Lack of Political Will
To me, there seems to be a slew of other priorities in Washington. There is little to no political will to bring this issue to critical mass. President Joe Biden has spoken out about the need for cannabis reform. However, as the report from the Cannabis Training University states, he firmly opposes cannabis legalization. This objection remains in place despite a proposal by Senate Majority Leader Chuck Schumer that would legalize marijuana in addition to expunging non-violent criminal records.
In typical Washington fashion, the proposal includes something that Biden would probably agree to (the expungement of records) with something that he opposes. The result will likely be something that can be declared as a small victory.
And don’t forget that even that small victory will have to be claimed by next year’s mid-term elections or else it will not even be presented for a vote.
I’m spending so much time on this because cannabis stocks aren’t going to excite investors until cannabis is legalized at the Federal level. The other alternative is for individual states to continue legalizing recreational marijuana. Currently, 18 states have voted for legalization.
TLRY Stock is a Long-Term Investment if It’s Anything at All
I’m sure that traders can point to this technical signal or that technical signal to support a profitable trade in TLRY stock. I wish you well. If you’ve read anything I write, you’ll know that trading isn’t my thing. I’m looking at stocks that I would look to hold as investments.
Without a clear timeline for legalization, TLRY stock doesn’t fit that criteria for me. But if you own the stock or plan to, I’d advise you to hold on tightly. The payoff may still be years away.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.