Tilray (NASDAQ:TLRY) — the global cannabis producer reported a surprise profit in its latest earnings report — sending its stock up 3%.

What’s the big deal? Cannabis stocks shot up in recent weeks after the House passed a bill to decriminalize cannabis.

• This is the second time the bill has passed the House. The first time, the Senate failed to take it in for a vote — and its chances look slim again.
• US legalization is the barrier to cannabis stocks, and until then, the upside in cannabis stocks is limited.

Plotting away: Tilray is one of the few cannabis stocks listed on North American exchanges. Companies selling cannabis in the US aren’t allowed on the US exchanges — the reason why many trade on Canadian exchanges.

• Tilray has acquired several companies with exposure to the US market to position itself for a potential US legalization
• Loophole: To maintain its US listing, these deals only close if the US legalizes cannabis.

Last year, Tilray acquired majority shares in MedMen — which has 27 retail locations and 22 licenses in the US. Per Tilray CFO, the company is building the infrastructure needed for an eventual US entry (WSJ).

Earnings report: Tilray is forecasting $4B in annual revenue by the end of 2024 — compared to the $604M it made in the last 12 months. In its earnings report, Tilray reported:

• Net revenue of $152M — up 23% from the same quarter in 2021.
• Earnings per share of 9 cents vs. expectations of 8 cents loss.

Some industry veterans are leaning towards US cannabis stocks trading on Canadian exchanges. Given their lack of access by US retail investors, veterans see them as having better valuations.

For US investors without access to international shares, the AdvisorShares Pure US Cannabis ETF (NYSE:MSOS) is the only actively managed US-listed ETF with exposure to US cannabis, per AdvisorShares.