Tilray Inc. (TLRY) saw its stock plummet 5.41% on Friday, as the cannabis sector continues to face headwinds due to the lack of federal reform and regulatory challenges in the United States.

The broader cannabis industry has been struggling, with the AdvisorShares Pure US Cannabis ETF (MSOS) down 48% for the year. Major players like Curaleaf Holdings (CURLF), Verano Holdings (VRNOF), and TerrAscend (TSNDF) have experienced significant losses, while Canopy Growth (CGC.AU) and Tilray Brands (TLRY) have fallen 45% and 37%, respectively.

The sector's challenges stem from the lack of progress on federal cannabis reform, with the incoming GOP-led Congress unlikely to prioritize cannabis legalization. Additionally, the Drug Enforcement Administration's review of the reclassification of cannabis may not be completed until 2026 or later, further delaying progress.