Back on April 18, 2019, cannabis producer Canopy Growth (TSX:WEED)(NASDAQ:CGC) announced plans to acquire multi-state marijuana operator Acreage Holdings. Back then, it was a revolutionary move for the company that looked like it would open up significant growth opportunities for the business.
Unfortunately, six years since that announcement, marijuana still isn’t legal in the U.S. Canopy Growth has launched an entity, Canopy USA, which has acquired the shares outstanding of Acreage Holdings. But due to the federal ban on cannabis in the U.S., Canopy Growth still can’t technically control and operate Canopy USA or any multi-state operator, without running afoul with the exchanges it trades on.
The company put forth an aggressive growth strategy six years ago that focused on the U.S. market in the hopes that it would become legal, but that hasn’t happened. And it underscores the risks of investing based on hopes of government legislation and reform.
In the six years since the initial announcement of its plans to acquire Acreage, Canopy Growth stock has plummeted by 99.7%. It has lost nearly all of its value. Today its market cap is around $300 million, which is a far cry from the billions in market cap it had in the past.
Unfortunately, things don’t appear to be getting better anytime soon as the U.S. is no closer to legalizing marijuana today. With a Republican government in charge, there’s little reason to be optimistic on the near term.
Canopy Growth is nothing more than a speculative buy and investors should be aware of the extremely high risk that comes with owning this stock.