While Tilray (NASDAQ:TLRY) is a Canada-headquartered company, TLRY stock will certainly move on changes in U.S. cannabis laws. If you expect to witness cannabis declassification and/or decriminalization in the coming quarters, now is a good time to invest in Tilray.
After cannabis was legalized in Canada, some financial traders wagered that Cannabis 2.0 would catalyze huge gains in cannabis stocks. However, that didn’t pan out. Nevertheless, there’s a strong bull case in 2023 and beyond as Tilray remains a strong contender in the North American cannabis-and-beer category.
Why Did TLRY Stock Fly Higher This Summer?
As TLRY stock doubled from $1.50 to $3 before pulling back this summer, some commentators may have assumed that this was due to a massive short squeeze. Sure, a short squeeze might have been in effect, but that wasn’t the only contributing factor.
Here’s what happened. The U.S. Department of Health and Human Services called for cannabis to move from Schedule I (a highly restrictive category) to Schedule III (which is less restrictive). Finally, cannabis stock investors saw some hope on the horizon.
Tilray’s shareholders have suffered greatly since October 2018, when TLRY stock traded in the $150 area. In other words, even after a recent share-price surge, there’s still plenty of headroom for upward movement.
Cannabis isn’t classified as a Schedule III drug yet, and it’s still not decriminalized on a federal level in the U.S. I suspect that cannabis will be decriminalized at some point, however.
Then, cannabis companies, including Tilray, will undoubtedly receive more favorable legal and tax treatment. Just imagine the impact that would have on Tilray and TLRY stock.
Tilray’s Diversified Business Model
Seasoned investors often prefer to diversify their portfolios. They might also favor companies that have diversified business models — and among cannabis companies, Tilray definitely fits this description.
As InvestorPlace contributor Chris MacDonald summarized, Tilray “is a major player in the cultivation and distribution of cannabis.” However, there’s more to Tilray than that, as the company also “sells pharmaceutical and wellness products, and has a growing presence in the beverage alcohol sector.”
A historic moment occurred in the cannabis market when Tilray agreed to acquire eight beer/beverage brands from alcoholic beverage giant Anheuser-Busch (NYSE:BUD). With those acquisitions, Tilray is expected to become the the fifth-largest craft beer business in the U.S.
Furthermore, Tilray announced that the company is “actively seeking strategic acquisitions in the spirits and beverages industry.” It will be interesting to see if Tilray purchases any well-known brands in the coming months.
Additionally, Tilray recently disclosed that it has introduced two of its popular craft beer brands in the Bahamas. Tilray expects these brands to be “available soon at additional locations across the Caribbean.”
Capture Multi-Bagger Gains With TLRY Stock
Tilray’s business model is diversified beyond basic cannabis production. This should stand the company in good stead as investors wait for cannabis to be re-categorized in the U.S.
And if/when cannabis is finally rescheduled, Tilray’s financial results could improve rapidly. Therefore, TLRY stock has plenty of room to move higher and enterprising investors should consider taking a small share position now.
On the date of publication, David Moadel 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.
