Investors Should Buy Tilray Stock as Legalization Approaches

  • Tilray’s (TLRY) CEO remains bullish on the industry. He calls it a $100 billion opportunity.
  • A few key legislations are currently making their way through Congress.
  • Democrats will attempt to get legalization done in August. Buy in now.
 Close view of Tilray (TLRY) logo on a smart phone. Tilray specializes in cannabis research, cultivation, processing and distribution
Source: Lori Butcher /

Tilray (NASDAQ:TLRY) investors have not had a good few months. While many are currently losing patience, industry insiders remain more bullish than ever. This bullishness is in sharp contrast with the painful decline in TLRY stock.

The stock started the year with a price of around $7.60. It declined to a low of $4.80. Then rallied to the $8 level. Now it is trading near the bottom at $5. Quite a rollercoaster which I am sure short-term traders love. Every swing represents close to a 50% movement in either direction.

It is clear though that TLRY stock is trading nowhere near its long-term highs. Thus investors willing to bet on this industry could be handsomely rewarded.

TLRY Tilray $5.07

Cannabis Holds Plenty of Promise

Despite the excitement basically evaporating from the industry, Recreational cannabis still holds plenty of potential. I mean it wasn’t too long ago in 2018 that TLRY stock was worth around $280. Now the stock is having difficulty even mounting a successful rally.

Nothing has changed though with the overall potential of the industry. Recreational cannabis still holds many good characteristics. Especially when compared to the far more risky and addictive drug: alcohol or other harder drugs.

As mentioned in an interview, Tilray CEO Irwin Simon mentioned that there is an upper limit on tequilas sales but infuse that business with THC and you’ve suddenly opened a whole new other markets.

Despite the lack of enthusiasm from investors which has left TLRY stock trading on a downtrend, Simon is still excited about the future of the industry. In fact, there is a clear disconnect between the tailwinds the industry currently has and the headwinds that have kept TLRY stock at the $5 – $8 range. The Cannabis industry has the potential to be an over $100 billion dollar industry. The legislation that could potentially open these floodgates is pretty close to being passed.

Legalization Is Inching Closer

There are a few key pieces of legislation that are currently making their way through Congress. These are the MORE Act, the SAFE Banking Act and the CAOA Act. Both the Senate and House are continuing to hash out the details of federal legalization. It is clear that there is growing agreement on both sides of the political aisle to get cannabis legalization done.

The current legal framework makes it difficult to invest and build the infrastructure needed to grow and sell cannabis. Being Canadian-based also means that Tilray cannot own a cannabis license. Thus it is making a big bet by acquiring U.S.-based spirits companies. The hope is that these can act as a distribution arm for the company.

The legislation will be deliberated in the Senate in August. The timing is key as we’re only five months away from the November midterm elections. I believe then that the Democrats will be under tremendous pressure to get something done in that time. They are currently polling behind their Republican rivals. So a legislative win on marijuana could be just what they need to turn the tide before the election. I expect a solid pop for TLRY stock should marijuana legalization pass.

Investing Takeaway for TLRY Stock

TLRY stock tends to perform well during news announcements of Federal legalization. The stock rallied hard from $5 to $8 last March on the idea of legislative momentum for Cannabis. Tilray’s stock has been absolutely crushed in recent months. Therefore, a return of enthusiasm for the industry is sure to set the share prices soaring.

At the current price of $5 even a modest rally back to $14, the November 2021 high, is close to a 3x return. With Tilray’s dominance of the Canadian market, it could be a direct beneficiary of US Federal legalization. The stock remains highly volatile and speculative. But there is plenty of potential upside in TLRY stock.

On the date of publication, Joseph Nograles 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 Publishing Guidelines.

Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.

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