It was in October 2018 that Canada legalized recreational marijuana. The hype leading up to a fully legal pot market in the country made investors bullish on pot stocks, sending many of their valuations to obscene levels.

Below, I'll look at how much a $5,000 investment in Tilray Brands (TLRY -1.56%) at the time of legalization would be worth today. It might surprise you just how little you would have left, because to say Tilray has struggled would be a gross understatement.

Tilray hit a high of $300 in 2018

At its peak, there was way too much optimism around Tilray being able to import marijuana into the U.S., and its shares soared to a high of $300. It was an intraday high, and the stock would end up closing much lower: $214. But it puts an exclamation point on just how bullish investors were at the time.

On Oct. 17, 2018, when Canada officially legalized recreational marijuana, shares of Tilray closed at $148.25. If you invested $5,000 into the stock back then, you would have about 34 shares of the cannabis company.

Today, with the stock trading around just $1.60, that investment would be worth a little over $54 -- a mammoth 99% loss, nearly wiping out that entire investment.

There's little hope of a turnaround

Tilray's stock is trading near its 52-week low, and its market cap is now around $1.1 billion. But a low valuation is unfortunately not a good enough reason to invest in the business.

The company has been expanding via acquisitions, the most notable being HEXO. But that's simply one struggling cannabis business swallowing up one that's even worse. While Tilray might gain market share via acquisitions, it will also take on more problems and cash burn as well.

The big obstacle for the business today is that it's stuck in a highly competitive Canadian pot market with limited growth opportunities. It has already pulled its $4 billion pie-in-the-sky sales forecast earlier this year after realizing that its annual revenue will get nowhere near that level anytime soon -- over the trailing 12 months, the company has generated sales of just $603 million.

The European market offers opportunities, but there's no recreational market. And while there is the potential for medical marijuana in Europe, Prohibition Partners -- a platform for the cannabis industry -- estimates that the entire market is worth only around $600 million. By comparison, in Canada, consumers spent 4.5 billion Canadian dollars ($3.4 billion) on adult-use pot in 2022.

Investors should avoid Tilray's stock

Even if you're willing to wait years for the cannabis industry to grow, the risk is that the pot stock you invest in might not be around by the time markets and growth opportunities open up. It's a real risk that investors need to consider.

And with Tilray Brands still burning through $84 million in cash over the past four quarters and acquiring troubled marijuana businesses for the sake of growth, the cash burn could get worse.

Tilray has $408 million in cash and short-term investments on its books right now, so it isn't running out of money anytime soon. But without a significant improvement in its financials, it's hard to be optimistic about the company. 

Investors are better off simply avoiding Tilray Brands. As low as the stock is right now, it can always go lower.