Tilray Is Down 57% in 2026. Here's What History Says About Buying Pot Stocks at the Bottom

Tilray Brands (NASDAQ: TLRY) is having a terrible year. The company's shares have declined by 57% to date. Some may see that as an opportunity to buy the company's shares on the dip, but that's only a good strategy if we have strong reasons to believe the stock will rebound and perform well from here on out. Is that really the case? Perhaps looking at previous times Tilray's shares declined significantly during a calendar year can help shed light on what may happen next.

Image source: The Motley Fool.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

History paints a clear picture

Choose any calendar year since the turn of the decade at random, and it is much more likely than not that Tilray was a market laggard during that year. Let's start with 2021. Tilray actually started that year on a strong note, rising by more than 600% at some point. However, the company ended up giving up all those gains, and then some. It ended the year down almost 15%, while the S&P 500 gained almost 27% over the same period. But did Tilray bounce back after that? Not really. Let's now turn to 2022, which, in fairness, was a terrible year for the entire stock market. The S&P 500 dropped by 19%. But Tilray lost significantly more value, declining by nearly 62%.

Some may think that Tilray's 2022 performance was due to broader market issues that had little to do with the company. But it also failed to perform well the year after, even as the S&P 500 roared back. The index gained 24%, while Tilray lost 14%. Then the pot company also lagged broader equities in 2024 and 2025 (despite gaining momentum toward the end of that year, it ended up giving up those gains), and again in 2026. Tilray has lost more than 90% of its value since early 2021, whereas investing in an S&P 500 ETF would have more than doubled investors' capital.

Can Tilray break precedent?

Tilray's bulls will be quick to point out that the past is no guarantee of the future. Sure, Tilray has destroyed shareholders' wealth over the past five years, but the company might bounce back, especially if there is regulatory progress in the highly regulated cannabis industry that the company could capitalize on. And there is, in fact, some news on that front. The federal government has moved certain medical cannabis products from Schedule I to Schedule III.

This change will make research into the substance's potential health benefits much easier, potentially opening up monetization opportunities. It will also allow some medical cannabis companies to deduct ordinary business expenses, something they couldn't do before this change. So, that could help decrease expenses and increase operating profits and margins for some pot growers. Further, the U.S. federal government is also considering broader rescheduling of marijuana, which may have an even bigger impact on the industry. Tilray already has operations in the U.S., with a particular focus on its beverage segment. The company is the fourth-largest craft brewer in the country.

So, Tilray may have existing distribution channels to hit the ground running and exploit any cannabis-related opportunities arising from recent (and potential future) regulatory changes. However, rescheduling cannabis doesn't make the substance legal at the federal level. It is still illegal to move it across state lines, for instance. So, while there are some benefits to the recent progress, there are also some limitations. Further, even assuming cannabis is fully legalized, that might not make Tilray particularly profitable. Legalization in its home country, Canada, didn't.

Why think that things will be different in the U.S.? True, the U.S. opportunity would be much bigger, if only because it has a significantly larger population. But it would also attract plenty of competition, perhaps from companies in other highly regulated markets, such as the alcohol industry. It is unclear that Tilray would emerge as a leader. Besides, legalization might also come with its own set of rules that could disrupt the market, as happened in Canada. So, Tilray is a company with uncertain prospects operating in an uncertain industry, posting mediocre financial results. There is little reason to think the stock can bounce back. It's best to stay far away.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.