Thinking About Buying Canopy Growth Stock? You May Want to Wait for This to Happen First

Canopy Growth (NASDAQ: CGC) stock is down 27% this year, and it's trading near its 52-week low, again. Unfortunately, with a stock that's been struggling as badly as Canopy Growth has, it can always seem like it's a cheap buy because of its ongoing tailspin.

The Canadian-based cannabis company once had a bright future due to hopes of widespread marijuana reform in not only Canada but the U.S. as well. Things haven't panned out as expected, and that's resulted in the pot stock crashing more than 99% in five years. At this stage, there's only one thing I would expect could turn the stock's fortunes around: renewed hopes for marijuana legalization in the U.S.

Why the stock's hopes hinge on marijuana reform

Marijuana may be legal in Canada, but that big carrot for Canopy Growth investors has always been that marijuana legalization may happen soon in the U.S. market. And when it does, it could open up massive opportunities for Canopy Growth, potentially leading to profitability one day.

The problem with the Canadian cannabis market is that it is highly competitive and restricted, making it incredibly difficult for a single company to dominate. The result is fragmentation, poor margins, and persistent losses.

Take Canopy Growth's most recent quarterly results as a prime example. For the last three months of 2025, the company's net revenue totaled 74.5 million Canadian dollars, which was roughly flat from the previous year. Meanwhile, even though it's been looking to get leaner, it still incurred an operating loss from continuing operations totaling CA$26.4 million -- higher than the CA$23.8 million loss it incurred in the prior-year period.

Canopy Growth's stock may seem cheap, but it's not worth buying

Canopy Growth has a market cap of around $380 million today, which is a far cry from the more than $12 billion it was worth five years ago when investors were optimistic about marijuana reform. This is a stock that has been an atrocious buy over the years, and unless you have a compelling reason to believe that a stock that's lost more than 99% of its value over the past five years has an amazing catalyst around the corner, the safest option is to just avoid it.

Until marijuana legalization actually has a realistic chance of happening in the U.S. (which doesn't appear to be the case anytime soon), you're likely better off just steering clear of the stock. While it has 'growth' in its name, Canopy Growth isn't much of a growth stock these days, and there are far better options with much less risk to buy right now.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.