Key Points
Marijuana rescheduling is positive news for the industry, but it may not necessarily help Canopy Growth.
Renewed hopes for marijuana reform in the U.S. have been giving the stock a boost of late.
The company has gotten smaller in an effort to reduce spending, but its losses remain significant.
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Canopy Growth (NASDAQ: CGC) has been rallying lately, as excitement has been growing in the marijuana industry. The U.S. government recently announced it rescheduled medical marijuana from a Schedule I substance to Schedule III, and that news has helped give Canopy Growth's stock a boost.
So far in 2026, the pot stock is up around just 2%, but it's been picking up steam over the past month, rallying more than 30%. With the stock taking a beating in recent years, could it be overdue for more of a rally, and is news around marijuana rescheduling in the U.S. just what it needs for its share price to soar even higher?
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Canopy Growth's stock has lost nearly all of its value in five years
Five years ago, Canopy Growth's market cap was around $11 billion. Hopes were high that the U.S. might be on the cusp of significant reform with the Democrats controlling both the House and Senate. However, nothing ultimately happened. Canopy Growth's results remained poor, and the company scaled down its operations, turning to an "asset-light" model in an effort to curb spending. Today, its market cap is right around $500 million. That's a 95% decline in value.
Things haven't gone Canopy Growth's way at all, and investors have felt the pain. That's why the recent positive news around marijuana rescheduling in the U.S. may have given them a reason to finally feel optimistic about the pot stock once again. The problem is that it simply isn't a better buy.
Rescheduling might help the cannabis industry, but it doesn't make Canopy Growth a better stock to buy
The immediate effects of marijuana rescheduling are that it will lower tax bills for multi-state operators in the U.S., but it won't have any positive impact on Canopy Growth. Since it's still operating in Canada and doesn't have a presence in the U.S., and likely won't until legalization takes place, it's effectively in the same position it was before. Rescheduling may be positive for the industry as a whole, but it doesn't mean that legalization will happen anytime soon, which is ultimately what Canopy Growth investors are eagerly awaiting.
Canopy Growth's business has shrunk in size over the years, but its losses remain significant, totaling 327 million Canadian dollars over the trailing 12 months. The stock isn't any safer of an investment on rescheduling news, and investors should be careful not to assume otherwise. It may have gone on for the rally along with other pot stocks in the past month, but it's likely to be a short-lived boost.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
