Cannabis stock Tilray had underwhelmed shareholders in 2021. However, the eventual legalization of cannabis in the U.S. will treat TLRY shareholders to a new high.

Canada-based Tilray  (TLRY) - Get Tilray, Inc. Report is one of the most talked-about stocks on online forums like Reddit. But the cannabis company's share price saw both highs and lows in 2021.

Volatility in TLRY shares was driven largely by uneven progress in U.S. cannabis legalization, as well as the company's merger and acquisition (M&A) activity.

Without a clear framework for marijuana legalization, Tilray's stock has become a target for short sellers. However, the company's management is looking for alternatives to keep Tilray's business growing.

Tilray Moves Beyond Cannabis

Tilray can be considered a "blue chip" cannabis stock. It's a major player in the industry and a leader in Canada, with approximately 12.8% of the marijuana market share.

Tilray is eyeing the opportunity to grow its business by infusing whiskey with cannabis. But the spirits industry could also yield the company billions of dollars while the full legalization of pot is delayed in the U.S.

CEO Irwin Simon has confirmed that Tilray is looking to move beyond cannabis because legalization is proving slower than management had expected. Meanwhile, third-party research estimates the size of the global spirits market in 2020 at $135.76 billion. In the U.S., the spirits market is expected to grow at a CAGR of 5% through 2026.

A U.S. Legalization Opportunity

Tilray has shown consistent performance in its brands in Canada, despite a recent small loss of market share there. Tilray currently has no cannabis business in the U.S.

Tilray's stock has suffered a lot due to the volatility generated mainly by the movements of retail investors. At one point, hopes for legalization that were renewed with the election of President Biden brought euphoria to the sector. Everyone wanted to jump into the billion-dollar cannabis market.

It's interesting that Tilray is looking for growth alternatives in other markets, such as the spirits industry, especially while the progress of legalization is slow.

However, once federal legislation occurs, investors should be aware that Tilray will face several headwinds in the short term related to taxes, fierce competition, and regulatory pressure.

However, for long-term investors, Tilray is on track to be a major beneficiary of legalization, given its brands' performance, its recent acquisitions, and its proven operation track in Canada.