• Shares of Tilray (NASDAQ:TLRY) continue to slide lower and are down 70% over the last year.
• The company’s latest earnings showed that its share of the Canadian cannabis market is declining.
• A new joint venture with fellow Canadian cannabis producer Hexo Corp. (HEXO) raises more questions than it answers.

Canadian cannabis producer Tilray’s (NASDAQ:TLRY) stock may not be out, but it’s definitely down.

The largest cannabis producer in Canada in terms of sales, Tilray’s share price has fallen 54% in the past six months to its current price of $5.15. TLRY stock is down 70% over the past 12-months and only slightly above its all-time low of $4.78 a share.

While the Toronto-based company has tried several measures to improve its fortunes, including acquiring rival Aphira to create what has been called the “world’s largest cannabis company,” nothing has been able to stop the slide in the share price.

Losing Market Share

Tilray last delivered financial results in early April, and while they showed improvement, the earnings did nothing to reverse the downward trend in the company’s stock. Tilray posted net income of $52.5 million for its fiscal third quarter, compared with a loss of $258.6 million during the same period a year earlier. The cannabis company’s earnings per share (EPS) for the three months ended February 28 amounted to $0.09, up from a loss of $1.03 the year before.

Tilray’s revenue in the quarter amounted to $151.9 million, up from $123.9 million in the same quarter last year, driven by increases in cannabis, beverage alcohol and wellness product sales. However, despite the improved earnings, Tilray said that its share of the Canadian cannabis market fell during the quarter. The company said that its retail market share dropped to 10.2% from 12.8% previously. The loss of market share grabbed the headlines and led to a further selloff in TLRY stock.

While the company blamed the declining market share on rising competition, covid-19 restrictions that impacted sales and the dissolution of a partnership with Marley Natural, a cannabis brand associated with musician Bob Marley’s family, investors were having none of the excuses and continued to dump TLRY shares.

Joint Venture

Tilray isn’t taking its demise lying down. In March, the company announced that it’s forming a strategic partnership with fellow Canadian cannabis producer Hexo Corp. (NASDAQ:HEXO). The joint venture will see Tilray acquire up to $193 million of Hexo’s debt, an investment that will give it the right to own 35% of Hexo.

In addition to the debt deal, the two companies said their joint venture will help the companies produce cannabis products such as pre-rolls, beverages and edibles, while leading to $50 million in cost efficiencies.

While the deal links two of Canada’s biggest cannabis producers at a time of market consolidation, it is not clear if partnering with Hexo will ultimately help Tilray. This is because Hexo is currently a basket case and in much worse shape than Tilray. Hexo’s most recent financial results showed a loss of nearly $700 million. HEXO stock currently trades for around $0.40 and has been threatened with delisting from the Nasdaq exchange. Hexo has also had its board of directors overhauled and is undertaking an aggressive cost cutting plan to save cash.

The new joint venture with Hexo requires Tilray shareholder approval, which is expected within 90 days.

Don’t Buy TLRY Stock

None of Canada’s cannabis producers would make a good investment right now, and that includes Tilray. While Tilray might be the biggest of the Canadian cannabis companies, it continues to struggle with tepid domestic sales, declining market share and a U.S. market next door that remains out of reach. With its stock down about 70% over the past year and sliding into penny stock territory, any money investors put into Tilray shares is likely to go up in smoke. TLRY stock is not a buy.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.