Shares of Canopy Growth Corporation experienced a significant surge in Thursday’s trading session. The upward momentum was driven by two concurrent developments: a pivotal shift in U.S. drug policy and a major acquisition within the Canadian market. Analysts suggest both events could materially impact the company’s financial performance in upcoming quarters.
Acquisition Aims to Elevate Premium Portfolio
On December 15, Canopy Growth finalized an agreement to acquire MTL Cannabis, a Montreal-based licensed producer specializing in premium “craft” cannabis flower. The transaction, valued between approximately $125 million and $179 million depending on the final enterprise metrics, involves purchasing all outstanding MTL shares.
MTL shareholders are set to receive 0.32 Canopy shares plus $0.144 in cash per share held. This strategic move is designed to bolster Canopy’s presence in the crucial Quebec market and significantly enhance its premium product offerings. The company plans to integrate MTL’s established brand loyalty within this segment into its existing commercial platform.
U.S. Policy Change Offers Potential Tax Relief
Concurrently, a confirmed executive order from U.S. President Donald Trump served as a primary catalyst for the stock’s advance. The order directs the Department of Justice to initiate the process of rescheduling cannabis under the Controlled Substances Act, moving it from Schedule I to Schedule III.
This reclassification would remove cannabis from the same category as substances like heroin, placing it alongside medically utilized compounds such as ketamine and anabolic steroids. While not constituting federal legalization for recreational use, the financial implications for operators are substantial.
Should investors sell immediately? Or is it worth buying Canopy Growth?
The focal point is Section 280E of the U.S. tax code. Currently, this provision prohibits cannabis companies from deducting standard business expenses. A move to Schedule III could eliminate this burden, a critical factor for Canopy’s U.S. strategy through its Canopy USA entity.
Market Reaction and Financial Context
The market responded positively to these developments on Thursday, December 18. Canopy’s stock traded in a narrow range between $2.04 and $2.09, ultimately closing the session with a gain of 7.36%. While some sector peers faced pressure from “sell the news” sentiment, investors appeared to price in Canopy’s potential advantage from 280E relief and the earnings potential of the MTL acquisition.
These positive signals arrive as the company continues its path toward profitability. For the second quarter of fiscal year 2026, reported on November 7, the earnings per share (EPS) figure stood at C$ -0.01. Although the loss remains minimal, it indicates a complete financial turnaround is still underway. The corporation is relying on cost-reduction initiatives and asset divestments to gradually improve its results.
Looking Ahead to 2026
The timeline for implementing the rescheduling process will be a key focus in the coming weeks. The procedure involves the U.S. Drug Enforcement Administration (DEA) and may include periods of public consultation. Market observers will also monitor the speed and efficiency with which Canopy integrates MTL Cannabis operationally and commercially.
For Canopy Growth, the combination of potential U.S. tax relief and a fortified premium portfolio creates a markedly improved foundation for achieving positive EBITDA. The crucial test will be whether the company can leverage these improved framework conditions operationally in early 2026 and realize the targeted synergies from the MTL transaction.
Ad
Canopy Growth Stock: Buy or Sell?! New Canopy Growth Analysis from December 19 delivers the answer:
The latest Canopy Growth figures speak for themselves: Urgent action needed for Canopy Growth investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from December 19.
Canopy Growth: Buy or sell? Read more here...
