Sad to say, any unfortunate investor who put $5,000 of their hard-earned money into marijuana stock Tilray Brands (TLRY 0.56%) in the middle of October 2018 would have lost nearly all of it.

The core reason is simple. Like many other marijuana stocks native to Canada, Tilray was on a (sorry!) high in those heady days; Oct. 17 of that year was when the first phase of that country's full-scale legalization kicked in. Since then, life has become a great deal more difficult for pot companies. Might there be any hope for this beaten-down one?

Coming down sharply from a high

The numbers, to be blunt, are ugly. That original $5,000 Tilray purchase would be worth $120.74 today, for a decline of almost 98%. That is not a typo or a math mistake.

After the initial flush of excitement around legalization, hard reality set in. Many businesses, both privately held and publicly traded, piled into the market.

Competition was heavy from the get-go, exacerbating challenges such as the persistence of black-market product, and licensing approval processes that could be painfully slow. Let's also not forget the pesky coronavirus, which kept some of even the most hardened potheads away from dispensaries. 

Another issue for some of the star Canadian cannabis socks, Tilray included, was that they tried to buy their way to the top. When marijuana companies were hot, they paid dearly for tack-on assets. Scale is only meaningful in a profitable industry, which the north-of-our-border marijuana scene definitely is not.

Meanwhile, acquisitions have to be paid and accounted for. This has strained both the balance sheets and -- hello, goodwill impairments! -- the income statements of many an overpaying Canadian weed company.

Tilray hasn't been shy about opening its wallet, most notably when it leaped to the top of the marijuana league tables with its all-stock purchase of peer Aphria in a deal that closed last year. Although this brought scale, it hasn't resulted in greatly improved fundamentals; in fact, in fiscal 2022 the fattened Tilray posted the deepest annual net loss in its nearly five years as a publicly traded business.

Similar to rival Canopy Growth, which is on the hook to buy U.S. multi-state operator (MSO) Acreage Holdings, Tilray is concentrating on building its presence south of its home country. After all, this huge, populous, and pleasure-loving nation is responsible for the vast majority of the world's legalized marijuana trade.

Tilray has assertively thrown money at U.S. assets. Among other moves, it acquired several American craft beer makers as part of its efforts to carve out its own niche in weed- and cannabidiol (CBD)-infused beverages in this country. It also engineered a confusing deal for a large pack of convertible shares issued by sinking MSO MedMen.

What the doctor ordered?

Tilray is also eagerly chasing glory outside of North America, with relatively robust operations in German medical marijuana, still the only type of sale and consumption allowed in that nation.

The business is reliable yet unspectacular and without vast growth potential; in the company's most recently reported quarter, international cannabis sales all told brought in $10.4 million of Tilray's nearly $59 million revenue for the period.

So basically Tilray has a bit of a shotgun strategy, aiming its efforts at a clutch of different markets and segments and hoping this will result in sustained, meaningful growth. It hasn't yet, and investors are clearly getting nervous about slowing revenue growth numbers. Big quarter-over-quarter leaps in the past were the only factors inducing many to hold on to stocks of stumbling weedies.

Marijuana bulls are hopeful that the U.S. will eventually decriminalize the drug. A sneak preview is likely in store this coming election day, when five states vote to make recreational cannabis legal. Yet companies born and bred in America are growing in scope and power, while Tilray sputters and looks on from the side. As matters stand now, the Canadian native doesn't present too much of a competitive threat.

Legalization abroad is moving at a snail's pace at best -- even the eager Germans won't properly green-light recreational weed until 2024, it seems. So we shouldn't expect any significant foreign market to move the needle for the company anytime soon either.

Ultimately, then, despite its size, Tilray is a company that isn't well positioned, doesn't have good fundamentals, and lacks a focused and compelling business strategy. At the same time, it operates in a rather closed, limited, and unprofitable sector with heavy competition. So while that steep price decline might twitch the noses of bottom feeders, I'd lay odds on it falling even more.