The record-breaking year for the marijuana industry just keeps motoring along. This week we witnessed two more states -- Utah and Missouri -- pass sweeping medical marijuana laws, bringing the number of states to have legalized marijuana in some capacity to 32. Michigan also got in on the action, becoming the 10th state (along with Washington, DC) to OK recreational cannabis use.

Prior to midterms, we witnessed a laundry list of game-changing events, all of which were eclipsed by the legalization of recreational marijuana throughout Canada on Oct. 17. Becoming the first industrialized country in the world to green light adult-use weed, Canada has opened the door to what could be $5 billion or more in added annual sales.

A businessman in a suit putting his hands up as if to say "no thanks."

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The No. 1 pot stock to avoid

And yet despite all of these positives, major risks remain for marijuana stock investors. Pot stocks have been catapulted into the heavens and now must meet investors' lofty expectations if they're to maintain their exorbitant market caps.

Of course, no two cannabis stocks are alike, and some clearly bear more risk for investors than others. Across the dozens of marijuana stocks that investors could buy right now, the one that has the words "danger" and "avoid" written all over it for the time being is once again British Columbia-based Tilray (TLRY).

For those who may not recall, Tilray took the stock market by storm over a four-week period between mid-August and mid-September, rallying from approximately $25 a share to $300 a share on the dot. It brought back memories of the investing fervor experienced during the dot-com days. It also demonstrated just what a bubble marijuana stocks had become. Within a few days of hitting $300 on an intraday basis, Tilray would wind up shedding two-thirds of its value.

However, this sleeping giant is far from hibernating. On Wednesday, following positive midterm election results for the cannabis industry and the announced resignation of Attorney General Jeff Sessions, an ardent opponent of the marijuana industry, Tilray soared more than 30%, or nearly $33 a share, pushing it back to a $13 billion market cap. With little backing this company fundamentally and a number of other factors working against it, Tilray looks to be the top marijuana stock to avoid right now.

An up-close look at budding cannabis flowers.

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Outweighing the good with the bad

What's interesting about Tilray is that the company itself isn't a complete train wreck. In fact, it has a business model that long-term investors might actually appreciate.

It's primarily targeting medical cannabis patients, which, despite being a smaller consumer pool than recreational weed, are a considerably higher-margin group. Tilray has the ability to be a top-five producer within Canada and is making its mark in international markets. It even has a pharmaceutical partnership under its belt with Novartis' generic drug division, Sandoz. But not even all of this makes Tilray a marijuana stock to buy right now.

Tilray's prospectus, which was released in June prior to its July debut on the Nasdaq, called for the company to have 912,000 square feet of developed facilities by the end of the current calendar year, including a little more than 850,000 square feet of production capacity, with the remainder being devoted to processing. This should, in my best estimate, give Tilray the capacity to produce perhaps 75,000 kilograms a year.

Now, Tilray does have the ability to expand its growing capacity. It has 3.8 million square feet of available space, allowing for what could be a quadrupling in production. But an estimated 75,000 kilograms a year is peanuts compared to the roughly 500,000 kilograms Canopy Growth Corp. may produce each year when fully up to speed or the nearly 700,000 kilograms of annual output Aurora Cannabis could be capable of when its ICC labs acquisition is complete and the company has had time to complete all of its projects. Tilray's market cap is nearly the same as Canopy Growth's and is close to doubling that of Aurora Cannabis, and that doesn't make a lot of sense when factoring in production potential.

A hundred-dollar bill on fire while atop a lit stove burner.

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Fundamentally, Tilray makes little sense as well. This is a company that's generating less than $40 million in sales on an extrapolated annual basis (i.e., multiplying its most recent quarterly sales total by four) yet is being valued at $13 billion.

Worse yet, it's unlikely to turn a profit anytime soon. That's because with the company being so far behind its peers in terms of capacity expansion, it'll be spending aggressively to catch up. Not to mention, Tilray is also laying the groundwork for its international expansion, building up its brands, and marketing those brands. All of this costs a pretty penny, and it'll probably ensure losses for the immediate future.

Last, Tilray is now a little more than two months away from hitting the end of its lockup period. The lockup period marks 180 days following a company's initial public offering in which insiders aren't allowed to sell. With Tilray's share price rocketing higher from its list price of $17 a share, it's almost certain we're going to see insider selling come mid-January.

In sum, Tilray has a business model investors can appreciate but a valuation that could frighten even the most bullish investor.