If you’re an investor eyeing the cannabis sector for lucrative returns, you’ve got to be an optimist with rose-colored glasses right now. Companies dealing in marijuana are among the stock market’s least impressive performers, constantly facing tough challenges in North America. They’re up against fierce competition, hefty taxes, and in the U.S., inconsistent legalization laws that create a fragmented market.
Take Tilray Brands (TLRY), one of the significant players in the cannabis market; their difficult journey through 2024 reflects the broader struggles of the sector. Let’s take a closer look at their situation.
### Striving for Diversification
Tilray’s narrative throughout the year was largely defined by its focused efforts to diversify beyond marijuana, signaling perhaps a lack of confidence in its core offerings. Throughout 2024, the company either expanded or streamlined their beverage holdings, which have now grown into an impressive craft beer collection, positioning them among the leaders in the U.S. craft beer market.
Given the challenging nature of turning a profit in the cannabis industry, Tilray’s shift is likely a strategic move. Yet, it’s worth noting that the craft beer boom happened years ago, and alcohol isn’t exactly known as a booming growth sector.
Nevertheless, adding beverage brands gave Tilray’s revenue a nice boost. In the first quarter of 2025, with results published in October, the company’s net revenue climbed 13% year-over-year, reaching $200 million for the first time. This climb was significantly propelled by a staggering 132% increase in beverage sales, which accounted for nearly $56 million. This was a relief, considering the core cannabis segment actually saw a drop, declining 13% to just over $61 million.
Despite these efforts, Tilray still didn’t mark a turn to profitability—a consistent thorn in their side. Their generally accepted accounting principles (GAAP) net loss did shrink slightly, yet they remained in the red by just shy of $35 million, compared to under $56 million from the same quarter the previous year.
### Seeking More Growth Prospects
The first-quarter figures illustrate Tilray’s persistent struggle for profitability; unfortunately, this performance is pretty typical for them. They’ve got other irons in the fire, like making inroads into the German market, which is yielding some results. However, Germany’s recent steps towards legalization seem more hesitant than wholehearted.
Today, some of the top names in publicly traded cannabis are almost akin to penny stocks. And much like penny stocks, they might be better left alone by prudent investors. Tilray is a case in point.
