What happened
Shares of the cannabis giant Tilray Brands (NASDAQ: TLRY) were up by 11.8%, on extraordinarily high volume, as of 12:38 p.m. ET Thursday. Meanwhile, every major U.S. stock index has traded lower today in response to growing concerns over a possible economic recession.
What's powering Tilray's shares higher on a rough day for stocks in general? Tilray, along with most other major cannabis cultivators, is swimming against the current today due to the prospect of Germany legalizing marijuana within the next year or two.
Image source: Getty Images.
So what
Germany's chancellor Olaf Scholz, along with his new coalition government, is reportedly intent on legalizing adult-use cannabis in the country by 2024. Tilray, for its part, would be a major beneficiary of such a move thanks to its state-of-the-art medical cannabis center located in Neumunster.
Perhaps even more importantly, though, a German move to legalize recreational cannabis use among adults could spur other EU nations to do the same in the near future, which would open up a market thought to be worth billions in U.S. dollars on an annual basis.
Now what
Is Tilray's stock a buy on this news? Tilray is obviously well positioned to take advantage of Germany's march toward legalization. But the company is still unlikely to realize any significant financial gains from this promising legal development any time soon. As a result, Tilray's stock is arguably only a strong buy for folks with a long-term investing horizon. Investors who aren't committed to owning this cannabis stock for a minimum of two years, on the other hand, might want to look elsewhere due to the industry's ongoing struggles with oversupply, various legal hurdles, banking restrictions, etc.
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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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