Thus far, 2026 has been an awful year for Tilray Brands (TLRY +2.26%), which is down over 55% as of the end of last week. It's a steep decline for a stock that's already been a bad buy for multiple years.
While it may not seem obvious, there is a reason it might surge in value before the end of the year: the upcoming midterm elections. Here’s why the stock could soon get a spark.
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The midterm elections could put cannabis stocks back in the spotlight
There's a lot at stake in the upcoming midterm elections. The Republicans currently control both the House and Senate, but this might not be the case for too much longer if the Democrats win back seats. This is where cannabis comes into play.
Cannabis reform has made its way into the headlines this year, with the U.S president announcing plans to reschedule marijuana from a Schedule I substance to Schedule III. Full-blown legalization is not on the horizon, but any talk of reform could potentially win voters for either side, and in doing so, put cannabis stocks in the spotlight. It's something for investors to watch out for.
Tilray is among the most popular and volatile stocks to own in the industry. Often, when there's talk of marijuana reform, the company's stock surges, as investors hope it may lead to long-term growth opportunities. If there are any cannabis-related developments leading up to the midterm elections, that may light a fire under this badly beaten-down stock. While it would take a massive rally for the stock's gains to turn green this year, Tilray has shown the potential to skyrocket quickly in the past.
NASDAQ: TLRY
Key Data Points
A rally is possible, but Tilray's stock isn't worth the risk
Tilray's stock can surge when there are positive cannabis-related developments. Unfortunately, it inevitably falls back down afterward, as has been the case in recent years. Rallies are often short-lived because the reality is that cannabis reform is a long, drawn-out process that can take months or years, depending on its complexity; it doesn't happen overnight.
While I wouldn't be surprised if cannabis pops back into the spotlight before the year ends and gives Tilray's stock a boost in the process, I don't think that's a reason to buy it today. It's been a highly volatile investment in the past, and without strong fundamentals, there remains a high likelihood for it to fall back down anyway.
