After U.S. markets closed Tuesday, pot grower Tilray Inc. (NASDAQ: TLRY) announced that it had acquired a majority of the outstanding senior secured convertible notes of MedMen Enterprise. The aggregate principal amount of the acquisition totals $168 million, representing 75% of the outstanding notes and 65% of the outstanding warrants. If (when) converted, Tilray will own about 21% of MedMen’s outstanding Class B subordinate voting shares (traded over the counter) once the transaction closes.

In its press release, Tilray noted that its “ability to convert the Notes and exercise the Warrants is dependent upon U.S. federal legalization of cannabis or Tilray’s waiver of such requirement as well as any additional regulatory approvals.” Canada-based cannabis growers can visualize the coming delisting of marijuana as a Schedule I dangerous drug in the United States and they are jostling for scale to take advantage of the opening of a vast new market.

Tilray shares traded up by nearly 9% in Wednesday’s premarket and all the Canadian pot stocks valued at around $1 billion or more also saw a bump of between 1% and more than 2%. Tilray is the second-largest Canadian pot grower, with a market cap of about $5.9 billion.

Canopy Growth Corp. (NYSE: CGC) traded up about 1.7% in Wednesday’s premarket session at $17.76. Canopy is the largest (by market cap) of the pot growers, with a value of around $6.9 billion.

Cronos Group Inc. (NASDAQ: CRON) is the third-largest pot grower, with a market cap of about $2.4 billion, and shares traded up about 1.6% early Wednesday.

Sundial Growers Inc. (NASDAQ: SNDL) is the fourth largest, with a market cap of about $1.5 billion, and it traded up about 1.5% in premarket trading.

Aurora Cannabis Inc. (NASDAQ: ACB) has a market cap of around $1.3 billion and is the fifth-largest pot grower. Its shares traded higher by just over 1%.

Organigram Holdings Inc. (NASDAQ: OGI), the sixth largest, is valued at around $736.2 million, and shares traded up less than 1% at last look. On Tuesday, the company announced that it was launching the cannabis industry’s first flavored, high potency THC lozenge under the Edison JOLTS brand.

All these stocks got a jolt in early February when Sundial and Tilray were included in the short-seller attack engineered by retail investors on Reddit’s WallStreetBets group. Tilray stock peaked with a 12-month gain of around 800% in its share price. MedMen soared to a gain of more than 650%. The other four added between 100% and about 300% to their share prices.

Since then, most of the big gains have been given back, and Tilray closed on Tuesday up about 85% for the year, while MedMen was up about 61%.

The bad news is that, compared with their long-term peaks in early 2019, every one of these stocks trades down at least 65%, even including the February 2021 spike.

If there is any doubt that Tilray and the others are betting big on federal legalization of cannabis in the United States, CEO Irwin Simon’s comments should remove them:

The investment we are announcing in MedMen securities today, one of the most recognized brands in the $80 billion U.S. cannabis market, is a critical step towards delivering on our objective as we work to enable Tilray to lead the U.S. market when legalization allows.

Could that be just wishful thinking? Alcoholic beverage companies made big investments in pot stocks in late 2018 and early 2019 and, even though those have not panned out so far, companies like Constellation Brands and Molson Coors have deep pockets.

So do tobacco companies, also looking for a way to grow their businesses without tobacco products. Vaping worked until it didn’t. Maybe they could have better luck with pot.

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