Why Canopy Growth Stock Has Crashed: The Real Reasons Behind Its 99% Decline

Canopy Growth’s stock collapse tells a cautionary tale about betting on a struggling industry. The company’s shares have plummeted over 99% in value over the past five years, now trading near $1 per share. While some investors might see deep discounts as buying opportunities, the fundamentals tell a very different story—and suggest this stock should remain on the sidelines.

Financial Progress Hasn’t Fixed the Core Problem

On the surface, Canopy Growth appears to be making headway. In the second quarter of fiscal 2026 ending September 30, the company reported net revenue of CA$66.7 million ($49.3 million USD), representing a 6% year-over-year increase. The net loss per share narrowed dramatically to CA$0.01 ($0.0074), compared to CA$1.48 ($1.09) in the same quarter the previous year. The company also owns recognized brands like Storz & Bickel’s vape products.

Yet these incremental improvements mask a deeper malaise. Revenue growth remains sluggish and inconsistent even as the company attempts to right its ship. The path to profitability looks distant at best. When Canopy Growth started the decade as a market darling—backed by beverage conglomerate Constellation Brands and riding waves of cannabis industry enthusiasm—few predicted it would struggle to generate meaningful returns despite favorable market conditions in Canada.

Why the Entire Cannabis Industry Faces Structural Headwinds

Here’s the crucial insight: Canopy Growth’s underperformance isn’t simply a management failure or strategic misstep. Across the cannabis sector, nearly every major pure-play cannabis company has underperformed the broader stock market over the past five years, regardless of their specific business approaches. This points to entrenched, structural challenges within the industry itself.

These obstacles include relentless regulatory oversight, intense competition that shows no signs of easing, illegal market channels that drain sales from legitimate businesses, and consumer adoption patterns that remain volatile. Even after Canada legalized cannabis nationwide in 2018, Canopy Growth failed to capitalize on first-mover advantages in what should have been an ideal environment. The company’s inability to gain traction in its home market suggests that regulatory changes alone cannot solve systemic industry problems.

Why Recent U.S. Regulatory Progress Changes Little for Canopy

The recent reclassification of cannabis from Schedule I to Schedule III at the federal level brings tangible benefits. Companies will find banking access easier, business expense deductions will become available, and research opportunities may expand. These improvements could theoretically help U.S.-focused cannabis businesses.

However, Canopy Growth has already demonstrated it cannot succeed even with supportive regulatory conditions. If the company struggled in Canada’s fully legalized market since 2018, the positive impact of U.S. regulatory shifts will likely prove insufficient to overcome the fundamental challenges plaguing the industry. Regulatory tailwinds help, but they won’t eliminate competition, illegal markets, or the demand uncertainty that continues to haunt the sector.

The Verdict: A Stock Without a Clear Path Forward

Canopy Growth stock remains a value trap rather than a genuine bargain. The company’s incremental progress on losses and revenue growth doesn’t change the underlying reality that it operates in an industry facing deep structural obstacles. Whether through improved financial metrics or new regulatory environments, the headwinds remain too powerful for Canopy Growth to overcome.

For investors seeking exposure to growth opportunities, the Stock Advisor team has identified ten more promising companies whose futures look considerably brighter. History demonstrates the power of backing winners early—Netflix investors who backed the company on December 17, 2004 saw their $1,000 investment grow to $450,256 by February 2026, while those who caught Nvidia on April 15, 2005 watched $1,000 transform into $1,171,666. That’s the kind of trajectory you want in your portfolio. Canopy Growth, struggling against industry-wide headwinds and mired in its own operational challenges, doesn’t fit that profile. The stock’s decline tells you everything you need to know about the risks of investing in a beaten-down company operating in a structurally challenged industry.