Canopy Growth Corp

Investors considering Canopy Growth may want to wait for the U.S. Drug Enforcement Administration's upcoming decision on rescheduling marijuana to Schedule III before buying shares. The DEA's efforts have been ongoing for months, with recent hearings and an executive order from President Donald Trump calling for reclassification in the most expeditious manner possible, though a final decision date remains unclear. Rescheduling would not resolve all regulatory headwinds but could allow Canopy to move closer to consolidating its U.S. affiliate, Canopy USA, and would benefit Canopy USA by removing deduction limitations under section 280E of the Internal Revenue Code. Past price action suggests that any surge on rescheduling news may be short-lived, as seen in April when cannabis stocks briefly rallied then retreated, making a long-term approach preferable to a short-term bet.

Canopy Growth has lost more than 99% of its value since its 2018 peak, but the company is now healthier with fiscal 2026 revenue up 6% to $200.4 million and cannabis revenue climbing 15%. Canadian medical cannabis revenue hit a record, international sales rebounded, and management targets positive adjusted EBITDA in fiscal 2027. The balance sheet improved to a net cash position of $92 million, yet the company remains unprofitable with negative free cash flow and a history of shareholder dilution. Until consistent profitability is demonstrated, the stock is seen as carrying too many execution risks to be a confident buy.

The DEA's expedited administrative hearing on moving cannabis from Schedule I to Schedule III began June 29, 2026, with a conclusion targeted for mid-July, a move that would eliminate the Section 280E tax burden that forces U.S. cannabis operators to pay effective tax rates above 70%. The AdvisorShares Pure US Cannabis ETF has rallied 99.2% over the trailing year on rescheduling hopes but remains 81% below its September 2020 launch price. Prediction markets, however, price just an 18.5% probability of rescheduling by the end of July and 23.3% by year-end, with a contract for rescheduling by March 31 having already expired worthless. Canadian licensed producers Tilray Brands and Canopy Growth, which are not subject to 280E, have seen their shares fall 97.5% and 99.6% respectively from their peaks, mirroring the boom-and-bust pattern of prior reform cycles. For U.S. multi-state operators held in the AdvisorShares fund, 280E relief would be a structural unlock, shifting cash flows from the IRS to the income statement and narrowing the capital-raising discount, but timing has repeatedly destroyed capital in the sector.