In a previous article, I discussed Tilray’s acquisition of Truss Beverage a company that makes cannabis infused beverages. Cannabis producers like Tilray (NASDAQ:TLRY) often raise investor caution due to their historical volatility.

The modest market response to the significant announcement of Tilray’s takeover of the remaining 57.5% stake in Truss Beverage, a Molson Coors Canada (NYSE:TAP) subsidiary, is surprising.

The Acquisition of Truss Beverage

On August 18, Tilray acquired the remaining 57.5% of Truss Beverage from Molson Coors.

This move aims to expand Tilray’s customer reach. CEO Irwin Simon previously mentioned Tilray’s pursuit of acquisitions in the spirits and beverages sector. The acquisition enhances Tilray’s market standing and streamlines sales and distribution.

Tilray invested considerable capital into this beverage brand, aiming for mainstream THC-based drinks. Focusing mainly on Canada, Tilray can test and refine formulations for potential U.S. recreational legalization.

Tilray continues to diversify into alcohol and cannabis drinks, acquiring brands from Molson Coors and Anheuser-Busch.

This aligns with their move beyond traditional cannabis. Tilray previously purchased eight beer and beverage brands for $85 million from Anheuser-Busch, gaining prominence in U.S. craft beer.

As a top cannabis company, Tilray holds a $1.79 billion market cap, specializing in beverages and wellness products, ranking fifth in U.S. craft beer.

Tilray’s Truss acquisition is part of a diversification strategy amid slow North American cannabis growth. As the sector expands, Tilray focuses on THC beverages and craft beer, aiming to lead Canada’s adult-use cannabis beverage market with a 36% share.

The company hopes that these cannabis-infused beverages will provide the kind of growth and profitability investors expect.

The margins in the cannabis game are increasingly shrinking, as this product sees most of the gains go to the government as taxes and retailers, suppliers, distributors and the myriad of other companies that touch the product on the way to the end consumer.

If Tilray can have greater control over this process and become an end to end player in this nascent market, the hope is that the company’s fundamentals will improve over time.

In July, Tilray’s premium brand RIFF launched sparkling THC beverages (Blue Raspberry Ice and Wild Raspberry Lemonade) with natural flavors. Fast-acting nano-emulsified THC ensures rapid effects for a delightful experience, ideal for solo or social occasions.

Blair MacNeil, the company’s Canada President, announces RIFF’s introduction of cannabis beverages, diversifying its Canadian offerings.

The Blue Raspberry Ice flavor offers a refreshing, nostalgic berry experience, available individually with 10mg THC in Alberta and Ontario.

What Now

Tilray Brands is primed for substantial growth as a leader in Canadian recreational cannabis, even amid regulatory challenges. Diversification efforts through alcohol and beverage acquisitions in the past year enhance its prospects.

That said, Tilray is leveraging its position in the emerging cannabis beverage sector while strengthening investor confidence. Cannabis-infused beverages are a high-growth area.

However, it’s unclear exactly how big this market will be, and just how profitable this endeavor will be out of the gate.

For now, I’ll remain on the sidelines and see if this deal can shift the company’s fundamentals in the favor of investors. For now, I think the jury is still out.

On the date of publication, Chris MacDonald 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.