A Potential Regulatory Shift Ignites a Frenzy in Canopy Growth Shares

Canopy Growth CA1380351009

Shares of Canopy Growth Corporation experienced a historic surge on Friday, December 12, skyrocketing by a remarkable 54%. The catalyst was widespread media speculation that President Trump could issue an executive order as early as the following Monday to reclassify cannabis at the federal level, a move that would represent a watershed moment for the entire industry.

The stock opened with a massive gap up to $1.385, far above its previous close of $1.13. Momentum accelerated throughout the trading session, with the share price settling near its daily high at $1.74. Trading volume exploded to over 36 million shares, signaling aggressive accumulation by both institutional and retail investors.

This parabolic move shattered key resistance levels at $1.30 and $1.50, forcing a brutal short squeeze against traders betting on continued weakness. Canopy Growth outperformed all its direct competitors, acting as the sector's primary leader for the day. The next significant psychological barrier for the stock now sits at the $2.00 mark.

The Core of the Speculation: Schedule III Reclassification

Reports circulating on Thursday evening indicated the Trump administration is preparing an executive decree to reschedule marijuana. The initiative would shift cannabis from Schedule I to Schedule III under federal law. While this does not equate to federal legalization, it would dramatically reduce regulatory burdens.

The most critical implication is the potential elimination of the punitive 280E tax rule. This provision has long stifled industry profitability by prohibiting cannabis companies from deducting standard business expenses. Its removal would clear a major path to positive cash flow, potentially accelerating profitability timelines by years.

Key reported details include:
* President Trump reportedly discussed the initiative this week with House Speaker Mike Johnson and Health Secretary Robert F. Kennedy Jr.
* Sector peers like Tilray Brands (+44%) and SNDL Inc. (+25) also saw substantial gains.
* A reclassification would not legalize cannabis nationwide but would significantly lower barriers.

Strategic Preparations Meeting Opportunity

Canopy Growth appears strategically positioned for this potential shift. Over the past twelve months, the company has systematically built out its "Canopy USA" ecosystem, designed to rapidly penetrate the U.S. market upon a regulatory change. The consolidation of Acreage Holdings, finalized in late 2024, solidified its U.S. footprint.

Recent financials have shown operational progress. The second-quarter results for fiscal 2026, released on November 7, revealed a narrowing adjusted EBITDA loss and improving gross margins, evidence that cost-cutting measures are taking effect.

A market strategist noted, "The market is pricing in a best-case scenario for Monday. If 280E disappears, Canopy's path to profitability shortens dramatically. However, execution risk remains, and the specific wording of any decree will be crucial."

Concurrently, the company continues its international expansion. It launched Claybourne Gassers Liquid Diamonds Vapes in Canada on December 4, followed by a listing on the Cboe Canada Exchange on December 6. Its medical division is also expanding into the Australian market.

High Stakes and Inherent Volatility

Monday, December 15, emerges as a pivotal day. Should President Trump sign the order as reported, it could unlock long-stifled value from U.S. assets. Any delay or a vaguely worded announcement, however, could trigger a sharp correction as investors take profits.

Cannabis equities are notoriously volatile in response to regulatory rumors, with many past rallies fading when concrete action failed to materialize. This latest speculation carries more weight due to the involvement of named high-ranking officials and a specific "Monday" timeline, lending it more substance than previous market rumors. The coming hours will determine whether the bullish sentiment is justified or premature.