Canopy Growth (TSX:WEED) was once 100 times the share price it trades at today. Shares currently trade at just $0.76 per share, as of writing. This is incredible, considering that just a few years ago, Canopy Growth stock looked like it would pass $70 per share and make its way to $100.
So, what happened?
The bubble burst
Canopy Growth stock saw shares collapse as the bubble surrounding cannabis stocks burst. It started in 2018, climbed back upwards, and then collapsed when the pandemic hit. Production plummeted even as demand remained high, causing the companies, including Canopy Growth stock, to close down production facilities.
Yet it was perhaps even worse for the popular cannabis stock. That’s because the company had gone through the growth phase that so many had mistakenly done before it. Instead of growing slowly and steadily, it acquired, purchased, and expanded far too fast.
This caused the company to all but collapse in the last few years. Research and development became a shadow of what it once was. The company sold off much of its production facilities, as mentioned, and laid off employees. Furthermore, it’s been far less into its Canadian market, choosing to remain focused on the potential growth in the United States.
What’s happened lately?
There does seem to be some reason to be optimistic about the future of the U.S. cannabis industry. After all, the majority of U.S. states have now legalized the product either medicinally or recreationally or both. What’s more, banks will now work with cannabis companies — something that was not the case over the last few years.
So, there is hope, but the next year is going to continue to be a tough one, if not beyond that. This is because the U.S. will go through another major election campaign, ending about a year from now. Marijuana will certainly be a focus once more, with President Biden hoping to decriminalize the product across the country.
We should also see further states legalize the product further, though perhaps not all. And that’s the sticking point. In the U.S., unless all states agree to legalization, it’s unlikely to be fully legal on a federal level until that happens. When it does, that should be great for Canopy Growth stock. But no one has a crystal ball at this point.
Will it pass $1?
The big question. Sure, Canopy Growth stock could surpass $1 but not until a few things happen. First, the market has to improve. The market still trades near 52-week lows as of writing. That puts risky investments like Canopy Growth stock on the sidelines.
From there, we’re going to have to see some major moves in the U.S. that spell out future legalization. It seems that as this happens, Canopy Growth stock usually climbs in reaction. But again, this may not happen in the next year.
However, the biggest move is going to be from Canopy Growth stock itself. The company simply must become and stay profitable. Its peers have done so in some cases, but Canopy has yet to achieve the goal. Until this happens, buyers are likely going to continue avoiding the cannabis stock — even if it surges past $1 in the next few months.
