Canopy Growth Shares Plunge Amidst Major Policy Shift

Thursday’s trading session delivered a volatile and contradictory performance for Canopy Growth Corporation’s stock, leaving investors grappling with a sharp sell-off that defied significant positive catalysts. Despite a landmark executive order from former U.S. President Donald Trump supporting cannabis reclassification and concurrent positive company developments, the equity closed deeply in negative territory. Market participants appeared to engage in a classic “sell the news” event, capitalizing on the long-awaited political confirmation to secure profits.

A Rollercoaster Session Halts Trading

The day commenced with considerable optimism. Canopy Growth’s share price surged more than 18% at one point, a move so extreme it triggered a temporary trading halt by Canadian regulators. However, sentiment reversed dramatically in the latter part of the session. By the market close on the Nasdaq, the stock had plummeted nearly 12% to settle at $1.69.

The initial rally was fueled by President Trump’s signing of an executive order directing the accelerated review of marijuana’s status. The order specifically calls for moving cannabis from the most restrictive “Schedule I” classification—which includes substances like heroin—to the less stringent “Schedule III” category.

This potential regulatory change carries existential importance for the industry. It would eliminate the application of tax code Section 280E, which currently prevents cannabis companies from deducting standard business expenses. Removing this barrier could slash effective tax rates from over 50% down to normal corporate levels, dramatically improving cash flow. For Canopy Growth, which recently reported an annual loss of approximately $277 million, such a shift would be transformative.

Should investors sell immediately? Or is it worth buying Canopy Growth?

Corporate Strategy and Divergent Analyst Outlook

Alongside the political news, the company announced its own strategic moves. Reports indicate Canopy is bolstering its market position through the planned acquisition of MTL Cannabis and the launch of a new vape product line. These steps reinforce an aggressive expansion strategy but were insufficient to counteract the broader sector-wide selling pressure.

Even with the severe price decline, some market experts maintain a bullish stance. Roth MKM analyst Bill Kirk reaffirmed his “Buy” rating on Thursday, attaching a price target of 8.00 Canadian dollars. This valuation presents a stark contrast to the prevailing market mood and suggests a significant divergence between the company’s fundamental assessment and its current trading price.

The path forward now hinges on the concrete implementation of the policy directive. While the executive order accelerates the review process by the Drug Enforcement Administration (DEA), the formal rulemaking procedure, including public commentary periods, remains pending. From a technical perspective, the stock’s sharp retreat has caused it to breach key support levels. Market observers are now watching to see if the $1.69 level will hold or if a retest of the annual low near $0.77 becomes likely.