The marijuana industry is a fast-paced industry where, if you turn your back for a moment, you could miss out on the next big capacity announcement, merger, or partnership. With perhaps $50 billion to $75 billion in global annual sales on the line over the next decade, it's no surprise that we're seeing a lot of excitement from investors concerning the pot industry.

However, it's also important to note that, while there will clearly be successful marijuana stock investments, there will also be a fair share of losers that fail to capitalize on their opportunities. One such pot stock that's no lock to be in the winning category at this point is Canadian grower Tilray (TLRY).

Dried cannabis buds lying atop a messy pile of cash bills.

Image source: Getty Images.

Following Tilray's initial public offering in mid-July, the stock pretty much couldn't be stopped. With around 90% of its outstanding shares not accessible due to the 180-day lock-up period that was to expire on Jan. 15, 2019, the company's low float fueled a rally that sent its share price soaring from a $17 list price to an intraday high of $300 in less than two months. For a brief moment, Tilray had more than doubled Canopy Growth's value and stood toe-to-toe with time-tested business models like Hershey and American Airlines Group.

However, Tilray has fallen back to Earth in a big way since hitting its peak in mid-September. Aside from a small handful of positives, such as forming a $100 million joint venture with Anheuser-Busch InBev and expanding a global medical cannabis product distribution deal with Novartis' generic-drug subsidiary Sandoz, it's been a steady downward move for one of the most popular pot stocks.

Tilray's house of cards comes crashing down

Arguably one of the biggest issues for Tilray is that it lacks the production necessary to call itself a major player. It ended 2018 with around 850,000 square feet in developed growing space in Canada and had 250,000 square feet in European construction underway. Even so, this may only be good enough for around 100,000 kilos in peak annual yield, which isn't even a guarantee to get Tilray into the top-10 producers among Canadian growers. Without ample capacity, Tilray may need to acquire cannabis from licensed producers, which'll lower its gross margin.

Speaking of margins, the company's bottom line is another problem. Because Tilray isn't producing much cannabis now and its peak annual output is nothing to write home about for a company with a $5.5 billion market cap, losses are likely for 2019 and 2020. In essence, Tilray is at the tail end of the field among growers for projected profitability.

A cannabis leaf laid within the outline of the red maple leaf in Canada's flag, with rolled joints and a cannabis bud set to the left of the flag.

Image source: Getty Images.

This is also a company that's completely changing its strategy. Having been a Canadian-focused business, Tilray's fourth-quarter operating results and conference call with analysts speak otherwise.

CEO Brendan Kennedy downplayed the company's path forward in Canada, noting that most domestic assets are overpriced, and instead announced the company's new focus on the U.S. hemp market and the medical marijuana industry in Europe. While these are potentially larger markets than Canada's weed industry -- especially if the U.S. legalizes cannabis at the federal level and Tilray already has infrastructure at the ready from hemp processing -- it's a major shift in business strategy that's going to add even more question marks to the company's bottom line.

Now we can add yet another worry: Insider selling.

Tilray's top executives ring the register, again

For those who may not recall, Tilray's insiders began parting ways with their shares shortly after the end of the lock-up period. On Jan. 24, 2019, we learned that CEO Brendan Kennedy sold close to 150,000 shares and chief revenue officer Woody Pastroius sold close to 20,600 shares, for a grand total of $12.6 million between the two insiders.

Of course, there wasn't anything malicious behind this selling. Rather, the selling was tied to restricted stock units that had vested for Kennedy and Pastorius and were sold on their behalf to cover IRS withholding taxes. Generally speaking, executives selling a portion of their holdings to cover their tax bills isn't uncommon around tax time.

However, the start of the second quarter brought with it a new round of selling for Kennedy and Pastorius. According to recent filings with the Securities and Exchange Commission, Kennedy disposed of a little more than 106,100 shares of Tilray stock at an average price of $63.44 on April 1 and April 2 for a grand total of $6.7 million in proceeds. Meanwhile, Pastorius sold a little more than 46,500 shares on April 1 and April 2 for about $3 million.

A businessman in a suit pressing the sell button on a digital screen.

Image source: Getty Images.

According to the filings, these sales were made under 10b5-1 trading plans, which automatically execute purchases and sales once certain conditions, be it volume or price, are met. In other words, these sales aren't necessarily a vote of no confidence from Kennedy and Pastorius so much as certain preset factors being met. 

Nevertheless, that's two separate selling events, albeit small, in a span of 2.5 months.

Just as concerning is the fact that private equity firm Privateer Holdings holds close to 80% of Tilray's common stock. Usually such a large shareholder would be a good thing. But it seems only logical that Privateer will want to begin locking in some of its post-initial public offering gains during the second half of this year. How Privateer is going to reduce its stake in Tilray without completely crushing the company's share price is an answer I don't have.

In sum, Tilray is becoming less attractive from an investment standpoint by the day.