A presidential order reclassifying medical marijuana under US federal law was supposed to unlock significant tax savings for the industry. For Canopy Growth, the benefits are largely theoretical. The company’s complex corporate structure means the parent never sees the bottom-line boost, leaving investors to focus on a deteriorating Canadian core and insider sales that tell a cautionary tale.
The Schedule III rescheduling, effective July 17, 2026, removes cannabis products from Section 280E of the US tax code — a provision that had forced companies selling Schedule I substances to forgo ordinary business expense deductions. But Canopy Growth does not directly sell cannabis in the United States. That job falls to its subsidiary, Canopy USA. Nasdaq has long prevented the consolidation of Canopy USA’s financials into the parent’s accounts, so the tax advantage stays trapped at the subsidiary level and never reaches the consolidated income statement.
Earnings Disappoint as the Stock Hovers Near Lows
The disconnect was underscored by Canopy’s fiscal fourth-quarter results, released on June 15. Revenue came in at C$71.2 million (roughly US$51.9 million), while the net loss per share of C$0.40 (US$0.29) was significantly wider than initial whispers had suggested. The stock closed at €0.8078 on Friday, down 2.91% on the day and just 7.71% above its 52-week trough of €0.75 touched on March 30. Year to date, the shares have shed 22.48% and now trade nearly 60% below the December 2025 peak of €2.00.
Analyst sentiment remains tepid. A consensus drawn from six houses produces a “Hold” rating: one sell, three holds, and two buys. For the current quarter ending in August, the sell-side is forecasting a loss per share of US$0.04 on revenue of about US$58.5 million. The next report is due on August 7.
Insider Sales Raise Eyebrows — But for the Right Reasons
Two top executives disposed of shares on June 17, but the transactions were entirely tax-driven rather than a bet against the company. CEO Luc Mongeau surrendered 135,231 shares at US$0.9741 to cover withholding taxes on vested restricted stock units. Board member Christelle Gedeon similarly sold 58,994 shares at the same price. Such mandatory sales are a routine consequence of equity compensation plans, yet they can unsettle a thinly traded stock.
Should investors sell immediately? Or is it worth buying Canopy Growth?
Meanwhile, short sellers remain entrenched but slightly less aggressive. As of May 29, 22.62 million shares were shorted, representing 5.61% of the float. The days-to-cover ratio stood at 2.8, while the total short position had edged down 1.75% from the prior period. Notably, some institutional investors have been adding exposure. Jones Financial Companies Lllp increased its holding by more than 10,300% in the first quarter, and Goldman Sachs Group raised its stake by 64.6%. These moves appear more tactical than fundamental, driven by specific fund positioning rather than a collective vote of confidence in a turnaround.
A History of Ash
Canopy’s slide from Canadian cannabis glory is well documented. After legalization in 2018, the stock rocketed to US$52.03, then settled around US$26 before crumbling below US$1. The industry’s problems are structural: wholesale prices have fallen about 17% since record-keeping began, an estimated three-quarters of consumers still buy on the black market (where a gram costs C$5.93 versus C$10.65 legally), and the entire legal Canadian market is valued at just C$8.6 billion — 0.3% of the economy. Canopy compounded its woes with ill-fated diversification into BioSteel sports drinks, while its medical cannabis unit has remained a relative bright spot, generating more than C$25 million in the latest quarter and accounting for nearly half of total cannabis sales.
Operationally, the company is now running lean rather than chasing growth. Management is focusing resources on core brands in regulated markets and streamlining selected business lines to adapt to a shifting demand landscape — away from raw flower toward edibles, beverages, concentrates, and vape products.
For the foreseeable future, Canopy’s fate will be determined by the math in Canada and the wall that separates its US subsidiary from its parent balance sheet. The White House may have opened a door, but Canopy cannot walk through it.
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