Any investor hoping to reap the rewards by holding marijuana companies must be a shiny-eyed optimist at this point. Weed companies are among the worst performers on the stock exchange since they are constantly barraged by headwinds in North America. At the very least, they have to contend with heavy competition, punitive levels of taxation, and (in the case of the U.S.) patchy, inconsistent legalization.

One of the larger players on the pot market is Tilray Brands (TLRY), and its difficult 2024 mirrored the woes of the cannabis sector in general. Let's do a flyby.

Grasping for diversification

Tilray's major story during the year was its concentrated attempts to diversify away from marijuana, which is hardly a ringing endorsement of its efforts with the core products. The company spent much of 2024 either adding to or consolidating its beverage holdings, now a sprawling collection that has given it one of the top craft beer portfolios in the U.S.

Cannabis is a notoriously tough business to profit from, so Tilray's pivot is entirely understandable. But the craft beer revolution -- if we want to call it that -- was years ago, and alcohol in any category isn't much of a growth product.

That said, tacking on beverage brands helped pump up the company's top line. In its first quarter of 2025, the results of which were published in October, Tilray's net revenue rose 13% year over year to hit $200 million for the first time, aided greatly by a 132% rise in the take for drinks (which brought in almost $56 million). Thank goodness, because the core cannabis business actually saw a decline, falling 13% to $61 million and change.

None of this made Tilray profitable, which was a chronic problem for the company. Generally accepted accounting principles (GAAP) net loss narrowed, yes, but the company was still well in the red to the tune of nearly $35 million (against slightly under $56 million in the year-ago quarter).

More growth opportunities wanted

I use the first quarter to illustrate Tilray's long-running struggle to reach profitability; that performance is, unfortunately, typical. Other initiatives might bear fruit at some point -- a push to become a player in the German market is having some effect, for example, but that country's recent legalization measures are half-hearted to say the least.

These days, some of the top names in publicly traded marijuana are glorified penny stocks. And, like penny stocks, they are probably best avoided by investors. Case in point, Tilray.