A Political Catalyst Sparks Renewed Interest in Canopy Growth Shares

Canopy Growth CA1380351009

After an extended period of decline, Canopy Growth's stock is experiencing a notable resurgence. This shift in sentiment is largely attributed to potential changes in U.S. drug policy under President Trump, which could provide a significant boost to the entire cannabis sector. However, while political speculation fuels short-term price movements, a weak technical outlook and the threat of share dilution continue to warrant investor caution.

Investor attention is now turning to concrete business performance. Canopy Growth is scheduled to release its third-quarter financial results on February 6, 2026. Market consensus anticipates a loss per share of $0.03, which would represent a substantial 96 percent improvement compared to the same period last year. Furthermore, the company's acquisition of MTL Cannabis is expected to be finalized by the end of February, a move projected to enhance overall corporate value. Analyst sentiment remains mixed for the time being; the average price target sits at $3.13, though individual assessments vary widely.

The Financial Impact of Potential Regulatory Reform

The primary driver behind the improved market mood is an executive order from President Trump in December. This order proposes reclassifying cannabis from a Schedule I to a Schedule III substance—a shift experts are calling the most significant change to U.S. drug policy in over half a century.

For companies like Canopy Growth, the implications are profoundly financial. Downgrading cannabis would effectively dismantle the burdensome tax regime enforced by "Section 280E." This current rule prohibits cannabis businesses from deducting standard operating expenses for tax purposes. Eliminating this barrier would dramatically improve the financial health of operators, even though the full regulatory implementation is likely to be a gradual process.

Technical Weakness and Capital Overhang

Despite a recent gain exceeding 4 percent, the stock's technical posture remains fragile. The shares continue to trade below their key 20-day and 100-day moving averages and have lost nearly half their value year-to-date. The Relative Strength Index (RSI) currently indicates a neutral stance, while the Moving Average Convergence Divergence (MACD) continues to show bearish pressure. A critical support level is identified at the $1.00 USD mark.

Adding to the uncertainty is a recent capital measure. A newly filed SEC registration statement permits the sale of more than 52 million shares by existing investors. This could create an overhang of available stock, potentially exerting downward pressure on the share price. On a positive note, the company secured its liquidity through a refinancing initiative in January and now holds approximately 425 million Canadian dollars in cash.