There is a special kind of irony in watching Tilray BrandsTLRY--. This is the stock that spent the last several years trading as the purest Wall Street lottery ticket on cannabis rescheduling. Investors bid it up to $23 a share in the past year on nothing but the hope that Washington would reclassify marijuana. Rescheduling finally started happening — and the stock has fallen more than half since January. At about $4, TilrayTLRY-- is down roughly 55% year to date and about 64% over the trailing year, a round-trip that has unwound most of the premium the market once paid for the Schedule I-to-III story.
The market appears to be saying the catalyst died. The facts say otherwise. The more interesting question is whether what actually moved — and what is still moving — matches the part of Tilray's business the market is being asked to value.
The catalyst didn't vanish; it is the part the market ignores
Here is what actually happened on rescheduling this year. On April 23, the acting attorney general and the Drug Enforcement Administration issued a final order placing FDA-approved marijuana products into Schedule III of the Controlled Substances Act. That is the federal reclassification cannabis companies have been begging for, and it carries one of the industry's most valuable consequences: relief from the IRS 280E rule, which has barred Schedule I operators from deducting ordinary business expenses.
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But the order covered only the medical and FDA-approved channel. Adult-use marijuana — the broader plant, the recreational market — stayed in Schedule I. So in late June the DEA began a second, larger hearing to weigh moving the full plant to Schedule III, which ran from June 29 through July 15. A final rule could still land within the coming year, though the outcome is not guaranteed; opponents fought the record, and there is a real risk the administrative law judge recommends Schedule II rather than III, with legal challenges to the April order already pending in the D.C. Circuit.
Here is the part worth pausing on. The step that already happened — state-licensed medical products to Schedule III — is precisely the channel Tilray says it is targeting in the United States. Management said it is evaluating a federally compliant medical cannabis market built around its pharmaceutical-grade capabilities, not adult-use retail. In other words, the rescheduling that actually moved is the one that matches the company's stated U.S. direction, and it is the same rescheduling the stock's collapse has priced as worthless.
The business isn't a pure U.S. pot play — which cuts both ways
Tilray is not actually built the way its ticker once suggested. In fiscal 2026, ended May 31, only about 29% of its $915.5 million of revenue came from cannabis. Another 28% came from craft beverage, 36% from pharmaceutical distribution in Europe, and the rest from wellness. That diversification is why it keeps posting record numbers while many pure U.S. operators struggle: total revenue rose 11% to a record $915.5 million, adjusted EBITDA rose 11% to $61.1 million, and international medical cannabis grew 34% for the year.
That mixed structure is the first thing to reconcile with the cheapness, because it frames every multiple. At a roughly $553 million market cap and near-zero net debt — the company ended the year with about $235 million in cash and net debt of under $1 million — Tilray trades at about 0.35 times book value. Against the $68 million to $75 million of adjusted EBITDA management has guided for fiscal 2027 on the path to over $1 billion of revenue, that works out to roughly 8 times forward adjusted EBITDA. A barely-levered business growing low double digits at eight times guided earnings is not an expensive price.
The cheapness depends on a number the market is right to question
The only problem is what "adjusted EBITDA" has to cover. Tilray's GAAP reality is not the adjusted reality. The company reported a $105.2 million net loss for fiscal 2026 — it broke even only after stripping out stock-based compensation, impairments, fair-value changes, litigation, and restructuring. Its adjusted net income was $12.2 million, and free cash flow was negative over the trailing year. The margin that matters at that point, the roughly 7% adjusted EBITDA margin management is guiding toward for fiscal 2027, is a management-defined number, and its history of being much smaller after the add-backs are removed is exactly why the market has been unwilling to pay the old premium.
That is the honest structure of this trade. The stock is cheap on a price-to-book basis and cheap against forecast adjusted earnings, and the piece of rescheduling that actually cleared this year lines up with the segment Tilray has chosen to pursue in the U.S. But the earnings that make it cheap are not yet delivered earnings, the adult-use part of rescheduling is not done, and the U.S. medical business is an aspiration, not booked revenue. A stock that ran to $23 on rescheduling hope and fell to $4 has now priced in none of that hope — and in the process it has also priced in none of the credit for the one rescheduling step that matches its plan. The forward-multiple check supports that: at roughly 8 times guided fiscal 2027 adjusted EBITDA with a nearly clean balance sheet, the market has collapsed the multiple below the growth rate, the same setup that marks a divergence rather than a broken story.
None of that makes it a compounding business yet. It makes it a cheap balance sheet with a catalyst that is advancing in its direction and an earnings number that has to keep being earned. Watch the adult-use ruling and whether the U.S. medical plan turns into contracted revenue; until one of those lands, the cheapness is real but so is the reason it stays cheap.
