Down 99% in 5 Years, Is It Finally Time to Buy This Stock?

To say that the cannabis industry has been a disappointment would be a enormous understatement. Toward the end of the last decade, investors rushed to invest in the most promising companies in the industry, as it appeared that regulatory changes would usher in a golden age of cannabis stocks. Some regulatory changes did happen. The golden age, on the other hand, never did. Most corporations in the industry have had awful performances during the past few years.

That's also true of Canopy Growth (NASDAQ: CGC), a leader in the industry. However, now that the stock is beaten down and has lost about 99% of its value during the past five years, is Canopy Growth finally worth investing in?

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Canopy Growth's position in the cannabis market

Let's start with highlighting what Canopy Growth may be doing right. The company has strong operations in the Canadian cannabis market, where it offers medical and recreational marijuana products, and has a presence in the vaping market through its Storz & Bickel brand. Canopy Growth's extensive portfolio of products and recognizable brands has given it a competitive edge in the crowded Canadian cannabis industry. Meanwhile, the company has been seeking to address a problem that practically every cannabis company faces: consistent net losses.

Canopy Growth isn't there yet, but its cost-cutting efforts seem to be bearing fruit. In the second quarter of its fiscal year 2026, ended Sept. 30, Canopy Growth's net revenue increased by 6% year over year to 66.7 million Canadian dollars ($48.4 million). The company's loss per share was CA$0.01, much better than the CA$1.48 loss per share it reported in the same period last year. The cannabis leader experienced strong growth in Canada, with revenue in the country surging 30% year over year, partly due to new product launches.

If the company can maintain that momentum in its home country while still cutting expenses, perhaps there is hope after all. It gets even better. Canopy Growth's shares recently soared on news that President Donald Trump would sign an executive order to reschedule cannabis as a Schedule III substance -- it is currently in the Schedule I category, which, by law, means it has no accepted medical uses and is highly prone to abuse.

This change would make it easy for cannabis companies in the U.S. to do business, as well as access loans and other banking services, although it wouldn't be full legalization. Still, this could be a great opportunity for Canopy Growth, which has a significant presence in the country through its subsidiary, Canopy USA.

Why Canopy Growth isn't worth the time

It's important to point out that Canopy Growth is far from having turned the corner. It has been close to profitability before (in fact, it has been profitable in the past). It has made progress in the Canadian cannabis market thanks to new product launches, and it has seen its shares soar on expectations of friendlier laws for cannabis companies in the U.S. However, Canopy Growth has, ultimately, continued to struggle with inconsistent financial results and net losses. One key reason is beyond its control.

Even with more favorable laws, the industry is incredibly challenging. Between stringent regulatory oversight, the expensive demands of vertical integration, the fact that many consumers have been getting their marijuana for a long time through illegal channels, and the stiff competition, every single method cannabis companies have tried to become successful has, so far, been a failure. Are things about to change? Maybe, but that would require more than Trump's decision (if he does, in fact, follow through) to reclassify cannabis.

Even full-blown legalization would likely come with an equation that cannabis companies wouldn't be able to solve easily. So, despite what's going on with Canopy Growth and the fact that its bottom line has become more promising, the stock isn't cheap. It's likely to further destroy shareholder value during the next five years, despite occasional spikes due to positive industry developments. It's best to stay away from Canopy Growth.

Prosper Junior Bakiny 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.