Cannabis stocks had a pretty poor day on Wednesday when many stocks recorded significant declines. However, on Thursday, many of those stocks managed to bounce back and one of those was Tilray (NASDAQ:TLRY), which rallied by as much as 30%. In light of such a rally, it could be a good idea on the part of investors to perhaps take a closer look at Tilray.
Experts believe that the turmoil surrounding the U.S. Presidential election was the reason for both the decline on Wednesday and the rally on Thursday. It is now looking likely the Democratic candidate Joe Biden is going to be the next President.
Moreover, the Democrats have a chance of getting 50 votes in the Senate, which is going to give them virtual control of the chamber. Democrats have historically been tolerant towards federal marijuana legalization and that is a major positive for Canadian cannabis companies like Tilray.
Companies like Tilray have been trying to enter the high-value American marijuana market for quite a while. However, the fact that marijuana isn’t legal at the federal level has always been a stumbling block.
That being said, it should be noted that Tilray does operate in the American market and has entered the hemp space through its acquisition of Manitoba Harvest, a hemp-based food producer. Hemp was legalized in the United States back in 2018.
Case for Tilray
The Tilray stock may have broadly underperformed for a considerable period of time, but the company’s strong infrastructure and worldwide production capabilities have made many investors optimistic about its future.
Moreover, Tilray seems to have adopted a different strategy from its peers and that could well give it a long-term competitive advantage. Tilray is aiming to become a major player in the medical marijuana space and at this point, it is conducting as many as 10 clinical trials.
The company seeks to take its medical marijuana products worldwide and recently, one of its products that is meant for treating nausea suffered by chemotherapy patients produced encouraging data from a clinical trial.
Although the company is not yet profitable, it has the advantage of having its principal plant in Portugal. It will allow Tilray to ship its products to the rest of the European Union without facing more tariffs. That is a cost advantage that might work out favorable in the long run.
Tilray is one of the stronger players in the cannabis market despite the fact that it has had to issue fresh stock in order to raise capital. Additionally, investors should note that cannabis stocks like Tilray could display volatility in light of the presidential results.
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