The cannabis industry has been a monumental disappointment. When adult-use marijuana was legalized in Canada in 2018, hopes soared that pot stocks would explode. But their collective performance thus far has looked more like a wet firecracker.

Tilray (TLRY -2.98%) has been no different. But it remains one of the largest cannabis companies in Canada, and if there is a turnaround in the industry, Tilray could be one of the biggest beneficiaries. Is that enough to make the stock a buy? Let's find out.

Recent financial results 

Thanks to a series of acquisitions, Tilray now holds the No. 1 market share in the Canadian cannabis industry. But things haven't been easy in the country since 2018. Despite legalization, there remained challenges that significantly disrupted the operations of cannabis companies.

That includes a complex licensing system. Competition was also a problem; the opportunity seemed too juicy to pass up, and the market quickly become overcrowded.

Competition also came from the illegal market, making things much harder for Tilray. So the company's cannabis operations haven't been particularly impressive. That's probably why it has diversified its business. It now has an alcohol and beverages segment that is performing reasonably well.

Besides cannabis and beverages, Tilray operates across two other segments: wellness (hemp-based products) and distribution, buying and reselling pharmaceutical products. Although financial results have somewhat improved for Tilray, they still leave much to be desired. In its fiscal 2023, ended May 31, revenue fell by a bit less than 1% to about $627.1 million.

However, the company's gross profit of $147 million jumped by 26% year over year as its cost of goods sold declined. Tilray remains unprofitable, and the bottom line is moving in the wrong direction. The company's net loss per share of $2.35 in fiscal 2023 was worse than the $0.99 loss reported in the previous year. In fairness, that was mainly due to non-cash impairment charges to reflect the declining value of the company's assets.

Tilray's adjusted net loss per share of $0.21, which excludes impairment and other charges, was better than its previous year's adjusted net loss of $0.38. The cannabis segment was its second largest for the year, coming in at 35% of revenue (down from 38% a year earlier), with its distribution business still being the biggest at 41%, which remained unchanged from fiscal 2022.

Beverages and alcohol had the biggest jump, going from 11% in 2022 to 15% this time around.

What does the future hold? 

Tilray's beverage segment is about to get even larger. On Aug. 7, it announced the acquisition of eight beer and beverage brands from Anheuser-Busch. The move will give Tilray the fifth-largest position in the U.S. craft beer market, at 5%. This is important because the beverage business has the widest margins of all its segments. In its fiscal 2023, it had a gross margin of 49%.

The next widest, Tilray's wellness segment, came in at 29%, a distant second. Cannabis had a gross margin of 26%.

So, as Tilray continues to pivot toward beverages, the margins and bottom line could benefit. But it isn't giving up on cannabis: In June, it closed the acquisition of HEXO, a former major player in the Canadian marijuana market that fell prey to all the problems in the industry.

Thanks to that transaction, Tilray now holds a 13% share of the Canadian pot market. Recent regulatory news regarding pot legalization in Germany, where Tilray does business, could also eventually move the needle for the company within its cannabis segment.

But with a poor track record and persistent net losses, it is still too early to get in on Tilray. To be sure, it track record in the Canadian pot market isn't entirely its fault. Yet even at its current level of about $2.70 per share, plenty of downside remains, and we have seen other cannabis leaders plunge from similar levels.

It doesn't mean the same fate awaits Tilray, but until it can prove itself, it is best to stay away from the stock. I wouldn't consider buying it until the company becomes profitable.