Tilray Brands Inc. (NASDAQ:TLRY) shares slipped 6.8% on Thursday afternoon after the cannabis and beverage company proposed a reverse stock split that would significantly reduce its number of shares outstanding.

In a notice to investors, Tilray said it would hold a special shareholder meeting on June 10 to vote on amending its certificate of incorporation to enable a reverse split in a range of 1-for-10 to 1-for-20. The exact ratio would be selected by the company's board.

CEO Irwin Simon framed the move as part of a broader effort to maintain Tilray's Nasdaq listing, stabilize share prices, attract institutional investors, and reduce administrative costs.

"A higher price per share would ensure compliance with Nasdaq’s continued listing requirements and places Tilray in a position to continue executing on our strategic plans," Simon said in a statement. "We expect this decision to aid in the Company's efforts to stabilize trading levels, attract and retain institutional shareholders, and decrease our cost structure by over $1 million on an annual run rate basis."

While reverse stock splits can help struggling stocks regain compliance or investor attention, they often trigger short-term selloffs due to concerns about dilution or underlying financial health.

Also read: Why Cannabis-Focused Biopharma Co. Avicanna Traded Up 26%+ Today

Despite Tuesday's drop, Tilray emphasized its improved financial position, citing a $76 million reduction in debt year-to-date and a cash and marketable securities balance of over $248 million as of February 28, 2025. The company says its net debt to EBITDA ratio is now below 1.0x, a strong sign of fiscal stability.

In a separate announcement Tuesday, Tilray also shared that it has expanded its medical cannabis product line in Australia, launching Good Supply Pastilles -- its first edibles offering for patients in that market. The sugar-free, vegan-friendly products come in THC10, THC10:CBD10, and CBD20 varieties.

"The expansion of our medical cannabis portfolio with the introduction of Good Supply Pastilles in Australia is a significant milestone," said Denise Faltischek, Tilray's chief strategy officer and head of international. "We are committed to providing high-quality, accessible medical cannabis products in convenient formats to patients worldwide."

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