Shares of the company, the third Canadian cannabis firm to list on a major U.S. exchange, opened at $23.05, compared with the IPO price of $17 per share. They hit an intra-day high of $23.94 before closing at $22.39.

The Nasdaq Composite ended down 0.4 percent.

Alan Brochstein, portfolio manager at 420Investor, believes Tilray's stock rose significantly due to its listing in the U.S. and its "reasonable" pricing.

"You have a larger universe of investors because you have such a scarcity of Canadian listed companies trading in the United States," said Brochstein.

Tilray's debut values the company at about $2 billion, after the deal was marketed in a range of $14 to $16 per share. It intends to use the proceeds to pay down debt and expand facilities in Canada and Portugal, it said in its IPO prospectus filed July 9.

Brochstein believes Tilray's debt repayment would mean the company may need more capital.

"When you do the math, if they want to be a leading global cannabis player, they need to raise more capital," he said.

Seattle-based private equity firm Privateer Holdings will continue to own 82 percent of Tilray.

Privateer Executive Chairman Brendan Kennedy said the firm originally looked at doing the IPO in Canada, but investor feedback convinced it to switch to a U.S. listing.

"Blue-chip mutual, U.S. long-only (funds) wanted someone to be regulated by the SEC and to report financials according to U.S. GAAP," Kennedy said in an interview at the Nasdaq stock exchange.

Tilray, a cannabis cultivator, processor and distributor, has pursued a public listing at a time when many Canadian weed producers have come off their peaks.

Cronos Group Inc has dropped 18 percent since its debut in February on Nasdaq and Canopy Growth Corp is down nearly 15 percent since it started trading on the New York Stock Exchange in May.

Recreational use of cannabis will be legal in Canada from October and investors have piled into Canadian weed stocks in anticipation. But some of the exuberance has worn off on high valuations and strict rules on labeling and branding.

Tilray sells marijuana to patients in countries including Canada, Australia and Germany through agreements with pharmaceutical companies. It also has production facilities in Canada and Portugal.

"We're all starting to see a separation between the winners and losers in the sector and Tilray would definitely be one of the leaders," said Greg Taylor, portfolio manager at Purpose Investments, which owns Tilray stock.

(Reporting by Danya Hajjaji; Additional reporting by Nichola Saminather and Joshua Franklin in New York; Editing by Chris Reese and Dan Grebler)

By Danya Hajjaji