TLRY Plunges 6.25% Amid Regulatory Uncertainty and Sector Volatility – What’s Next for Cannabis Giants?

Summary
• Tilray Brands (TLRY) slumps 6.25% intraday to $11.39, a 12.7% drop from its 52-week high of $23.20
• Trump’s rumored marijuana rescheduling sparks sector-wide speculation, with TD Cowen cutting TLRY’s price target to $10
• Options volatility surges: 239–291% implied volatility on key December 19 contracts

Tilray Brands’ sharp selloff reflects a perfect storm of regulatory ambiguity, sector-specific pressures, and technical exhaustion. With the stock trading near its 52-week low of $3.507 and a 10-for-1 reverse split complicating liquidity, investors are scrambling to parse signals from a market teetering between hope and despair. The cannabis sector’s fragile recovery faces renewed headwinds as federal policy shifts loom.

Regulatory Whiplash and Market Sentiment Drive TLRY's Sharp Decline
TLRY’s intraday plunge stems from conflicting signals in the cannabis regulatory landscape. While Trump’s potential rescheduling of marijuana to Schedule III could ease banking access and tax burdens, uncertainty around implementation timelines has spooked investors. TD Cowen’s revised $10 price target—down from $25—reflects skepticism about TLRY’s ability to capitalize on these changes amid Canadian market saturation and EBITDA projections of just $80 million. Meanwhile, the reverse stock split, while helping TLRY comply with Nasdaq bid-price rules, has concentrated volatility in a reduced float of 116 million shares. The stock’s 6.25% drop mirrors broader sector jitters, with Canopy Growth (CGC) down 3.26% as investors recalibrate expectations.

Cannabis Sector in Turbulence as Canopy Growth Dips 3.26%
The cannabis sector is under pressure as regulatory uncertainty amplifies sector-wide volatility. Canopy Growth (CGC), a key sector leader, fell 3.26% alongside TLRY, highlighting shared vulnerabilities. Both stocks face headwinds from oversupply in Canadian markets and delayed U.S. federal reforms. While TLRY’s beverage expansion and reverse split aim to differentiate it, the sector’s collective struggle to achieve consistent profitability—despite Trump-era optimism—has investors questioning long-term viability. The 52-week low of $3.507 for TLRY underscores the sector’s precarious position.

Options Playbook: Navigating TLRY's Volatility with Strategic Contracts
• RSI: 92.15 (overbought divergence)
• MACD: 2.21 (bullish) vs. Signal Line: 1.43
• Bollinger Bands: Upper $11.84, Middle $4.197, Lower -$3.44 (extreme bearish divergence)
• 200-day MA: $1.176 (far below current price)

TLRY’s technicals suggest exhaustion at critical support levels. With RSI at 92.15 and Bollinger Bands showing a $15.28 range between upper and lower bounds, the stock is primed for a directional move. The December 19 options chain offers two high-conviction plays:

• TLRY20251219P11.5 (Put): Delta -0.433, IV 239.33%, Turnover 17,218
- High implied volatility (239%) reflects extreme bearish sentiment
- Delta of -0.433 balances leverage and directional exposure
- Projected 5% downside (to $10.82) yields max payoff of $0.68 per contract
- Theta of -0.075197 indicates rapid time decay, favoring short-term moves

• TLRY20251219C12 (Call): Delta 0.527, IV 291.33%, Turnover 294,324
- 291% IV suggests market pricing in massive volatility
- Delta of 0.527 offers balanced bullish exposure
- Projected 5% downside (to $10.82) yields zero payoff, but a rebound above $12.58 (intraday high) could trigger gamma-driven acceleration
- High turnover (294,324) ensures liquidity for entry/exit

Aggressive bulls may consider TLRY20251219C12 into a bounce above $12.58, while bears should monitor TLRY20251219P11.5 for a breakdown below $10.97 (intraday low).

Backtest Tilray Brands Stock Performance
The 3-day win rate for TLRY after an intraday plunge of -6% is 43.94%, the 10-day win rate is 40.38%, and the 30-day win rate is 39.19%. The maximum return during the backtest was 2.11% over 30 days, indicating that while there is some potential for recovery, the wins are modest and the strategy may not consistently outperform a buy-and-hold approach.

TLRY at Crossroads: Position for Volatility or Exit Amid Regulatory Fog
TLRY’s 6.25% drop signals a critical inflection point as the stock approaches its 52-week low. With Trump’s rescheduling decision potentially imminent and sector peers like Canopy Growth (CGC) down 3.26%, investors must weigh short-term volatility against long-term catalysts. Key levels to watch: $10.97 (intraday low) for bearish confirmation and $12.58 (intraday high) for a potential rebound. Options traders should prioritize high-IV contracts like TLRY20251219P11.5 and TLRY20251219C12 for directional bets. For now, the path of least resistance appears downward—position accordingly.