Shares of Tilray Brands (TLRY Quick QuoteTLRY - Free Report) , one of the most well-known players in the cannabis space, have been declining steadily over the past month.

This downside can be attributed to the U.S. legislation passed last month, which tightened the legal definition of hemp, raising uncertainty around future sales of hemp-derived cannabinoid products. Additionally, Tilray’s recently implemented reverse stock split has weighed on sentiment, as investors often view such actions as indicators of financial strain or potential dilution risk.

Let’s delve into the company’s fundamentals to better understand how to play the stock following these recent changes.

Hemp Redefinition Rule Disrupts TLRY’s THC-Derived Beverage Market

Last month, U.S. lawmakers passed a provision — included in the bill that ended the government shutdown — that rewrites the federal definition of hemp, delivering a blow to the booming hemp-derived THC beverage and snack industry. Under this new rule, hemp-derived products will only remain legal if they contain no more than 0.4 milligrams of THC per container — a drastic tightening designed to close the loophole created by the 2018 Farm Bill.

Once this law comes into effect (expected in almost a year), most existing “low-dose” THC drinks, edibles or snacks, many of which contain 1-5 mg of THC per serving, will be reclassified as marijuana and therefore prohibited under federal law. This change has broad implications for companies participating in the hemp-derived THC products market, including Tilray, Canopy Growth (CGC Quick QuoteCGC - Free Report) and Curaleaf Holdings (CURLF Quick QuoteCURLF - Free Report) .

While that segment is still a relatively small revenue contributor for TLRY, this new regulatory change introduces uncertainty into a previously fast-growing category and makes future expansion into hemp-derived THC beverages more difficult.

Tilray publicly criticized the measure in its recent statement, arguing that federal clampdowns on hemp derivatives reflect a step backward for cannabis legalization and delay rational policy reform. Even though the company’s broader diversification into craft beverages and wellness products provides some cushion, this development serves as a reminder that U.S. regulatory risks remain unpredictable despite the optimistic tone on cannabis reform expressed by President Trump in recent months.

Reverse Stock Split Concerns TLRY Investors

Tilray’s recently implemented 1-for-10 reverse stock split has also weighed on sentiment. While the move boosts the stock price mechanically, it does nothing to strengthen the company’s fundamentals — a key reason why investors often view reverse splits as signs of financial pressure or persistent share-price weakness.

This reverse split also highlights the fact that Tilray hasn’t been able to build a strong enough business to lift its share price naturally — and that alone is a meaningful red flag for investors. With the company already facing uncertainty from the federal hemp rule, the split risks reinforcing doubts about Tilray’s near-term trajectory instead of restoring confidence.

TLRY Strengthens Cannabis Footprint at Home and Abroad

Tilray’s cannabis business spans both recreational and medical markets, and first-quarter fiscal 2026 results indicate encouraging progress in both areas. Cannabis revenues rose 5% year over year to $64.5 million, supported by double-digit growth in Canadian adult-use and international medical cannabis sales.

In Canada, adult-use revenues climbed 12%, reaffirming Tilray’s position as the country’s largest legal cannabis producer by revenues. Meanwhile, international sales increased 10%, led by strong growth in Germany and Italy, where the company benefits from its CC Pharma distribution platform.

TLRY also broadened its European presence by launching five new cannabis flower products in Germany, produced at its EU GMP-certified Neumünster facility. In Australia, Tilray Brand introduced its first medical cannabis edible, Good Supply Pastilles, a sugar-free, vegan-friendly option, underscoring its commitment to innovation and patient-focused treatment solutions worldwide.

TLRY Stock Performance & Valuation

Shares of Tilray Brands have plummeted 42% year to date against the industry’s 4% growth, as seen in the chart below.

Image Source: Zacks Investment Research

Estimates for TLRY’s loss per share for fiscal 2026 and 2027 have improved in the last 60 days.

Image Source: Zacks Investment Research

How to Play TLRY Stock?

While the recent sell-off reflects genuine concerns, it is important to note that hemp-derived THC products still account for a small portion of Tilray’s total revenues, limiting the financial impact of the regulatory shift. At the same time, the company’s core cannabis operations continue to show progress, supported by rising international medical sales, expanding product launches and momentum in Canada’s adult-use market. Tilray’s broader diversification into craft beverages and wellness brands also adds stability, while its improving cost structure and stronger balance sheet enhance its competitive positioning.

With a Zacks Rank #2 (Buy), the stock remains attractive in the near term, particularly as investors await clarity on the U.S. government’s approach to broader federal cannabis reforms. The recently passed hemp provisions have not yet taken effect, leaving room for potential adjustments or policy responses that could materially shift sentiment. For now, Tilray’s improving fundamentals and expanding global footprint position the stock well for investors willing to navigate near-term volatility.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.