Tilray Brands (NASDAQ: TLRY) faces mixed prospects amid market challenges. Despite high expectations following the legalization of cannabis in Canada in 2018, the company’s stock, along with the entire industry, has significantly declined over the past five years. However, improving financial results and changes in the regulatory landscape might make this a suitable time to invest in Tilray’s stock.

Tilray’s revenue has been growing in recent years, primarily due to acquisitions, making it the leader in the Canadian market with an 11.6% market share as of the end of the third quarter of fiscal year 2024. Nevertheless, organic sales growth has been weak, and the Canadian market has been unprofitable due to regulatory challenges and competition from illegal channels.

Tilray aims to overcome these challenges by diversifying its business, including a pharmaceutical segment, an alcoholic beverages segment, and a hemp-based wellness segment. Thanks to acquisitions, Tilray is now the fifth-largest craft brewer in the US. The company hopes that potential federal cannabis legalization in the US will open new opportunities in the cannabis beverages market.

Changes in the regulatory landscape could also support Tilray. In the US, marijuana might be reclassified from a Schedule I substance to a Schedule III substance, easing operations for companies like Tilray. Additionally, Germany’s recent legalization of limited recreational cannabis use opens a $3 billion medical cannabis market. However, despite these positive changes, Tilray’s prospects remain uncertain due to the competitive and challenging nature of the market.