I still remember when Canopy Growth (TSX:WEED) was among the top names in the S&P/TSX 60 index. Every investor believed in a “new paradigm” for cannabis.
Fast forward to 2025, and the weed boom is long gone. Legalization didn’t translate into profits, especially for Canopy. If you’re holding out hope for U.S. federal approval or another catalyst, you’re chasing a moving target. Here’s the hard truth about Canopy today.
Why I wouldn’t invest in Canopy Growth
Canopy is still burning cash. In the fiscal fourth quarter (Q4) of 2025, it posted an operating loss of $18 million and an adjusted earnings before interest, taxes, depreciation, and amortization loss of $9 million. That’s an improvement from prior years, but it remains unprofitable, with a free cash flow outflow of $36 million for the quarter, bringing the full-year cash burn to $177 million.
Debts have been reduced, now sitting at $304 million, but that just masks a core problem: sales are stagnant or declining. Total net revenue fell about 9% year over year, while Canada adult-use and international segments continue to underperform.
Meanwhile, the company issued shares in early 2025 to raise up to $200 million, diluting existing shareholders just to maintain its cash runway. That’s a classic sign of distress. Losses per share are also widening, down $1.41 per share in Q4 versus $1.01 last year.
From April 7, 2014, to July 10, 2025, a $10,000 investment in Canopy would have declined by 25.6% annualized to just $360. You’d have been far better off parking your money in risk-free Treasury bills.
Why weed stocks have disappointed
At a glance, cannabis and tobacco seem similar. Both sell addictive consumer products. Both face regulation and social stigma. But their business outcomes have been wildly different.
Tobacco companies are among the most profitable businesses in history. Paradoxically, decades of regulation actually helped the industry consolidate. Crackdowns forced weaker players out, while the survivors built massive scale, locked in distribution, and cut costs to the bone.
The result was a handful of global giants that generate enormous free cash flow, reward shareholders with rising dividends, and require little capital to maintain operations.
Cannabis took the opposite path. Legalization led to chaos. Dozens of undercapitalized companies rushed to market with big promises and bigger spending plans.
There was no industry-wide consolidation or paths to scale. Just endless product launches, facility buildouts, and acquisitions, all funded by waves of shareholder dilution.
Even worse, many cannabis management teams treated retail investors as exit liquidity, dumping shares into every rally with little regard for profitability or sustainability.
While tobacco companies were forced into efficiency, cannabis companies had no such pressure. Most never built the systems or financial controls needed to survive a downturn.
The result? A fragmented sector with bloated cost structures, uneven revenue, and little accountability, where profitability remains elusive even years after legalization. That’s the structural reason cannabis stocks like Canopy have failed to deliver.
The Foolish takeaway
Canopy Growth is a textbook failing company. Still unprofitable after years, bleeding cash, issuing shares, and trading at pennies. Unless the company can dramatically improve margins, rally sales, and stop the dilution, it’s hard to justify staying invested. For now, it looks more like a turnaround gamble than a reliable investment, especially with no profits in sight.
