Canopy Growth’s April Rally Fades as Structural Hurdles Overshadow Policy Win

Canopy Growth's stock surged on US cannabis rescheduling but quickly retreated, as the company lacks direct US operations and faces limited near-term benefits.

The US Drug Enforcement Administration’s historic rescheduling of medical cannabis products sent a jolt through the sector in late April, but for Canopy Growth, the initial euphoria has largely evaporated. The stock closed the month at $1.11, up 11.86 percent from March — a gain that masks a far more volatile trajectory beneath the surface.

A Policy Milestone with Limited Direct Impact

On April 23, Attorney General Todd Blanche signed the order reclassifying FDA-approved cannabis products and state-licensed medical marijuana from Schedule I to Schedule III of the Controlled Substances Act. The change took effect on April 28, following publication in the Federal Register. The Treasury Department simultaneously announced tax relief measures for medical cannabis operators.

The tax implications are significant. Under the old Schedule I classification, licensed cannabis companies were barred by Section 280E of the tax code from deducting ordinary business expenses — a structural disadvantage that has weighed on the sector for years. Rescheduling removes that restriction for medical operators.

Yet Canopy Growth finds itself on the sidelines of this direct benefit. The company produces in Canada and maintains no plant-touching operations in the US. Its exposure to the American market runs through a holding structure called Canopy USA, which holds stakes in Acreage Holdings, the Wana edibles business, and California-based extract manufacturer Lemurian. Those positions can only be consolidated when NASDAQ or NYSE permits US cannabis companies to be included in group financial statements — a condition not yet met.

A Rally That Ran Out of Steam

Canopy’s shares surged 28 percent on the rescheduling news, but the gains quickly unwound. By the April 30 close, the stock had slipped to $1.10, near the bottom of its daily range. Trading volume that day reached 13.5 million shares, well below the average daily turnover — a sign that institutional conviction remains tepid.

The market capitalization now hovers between $400 million and $500 million, a far cry from the $10 billion-plus peak of five years ago. Over the past twelve months, the company has posted a net loss of 327 million Canadian dollars.

Technical Pressure and Political Catalysts

Year-to-date, Canopy Growth shares are up roughly 2 percent, though the one-month gain exceeds 30 percent. Analysts identify the $1.11 level as a critical support zone; a break below that could invite further selling pressure. Only a move above $1.24 would brighten the short-term technical picture.

The next major catalyst is a DEA hearing scheduled for June 29 in Arlington, Virginia, which will address broader rescheduling — including the potential reclassification of adult-use cannabis. The hearing must conclude by July 15. A favorable outcome would extend Schedule III benefits to recreational operators, unlocking tax relief and DEA registration for that segment. For Canopy Growth, however, even that would represent an incremental step rather than a breakthrough.

Earnings Expectations and Sector Sentiment

Analysts project a loss of $0.06 per share for the upcoming quarter, an improvement of nearly 94 percent from the year-ago period. Revenue is forecast at roughly $53 million, up about 18 percent year-over-year. Zacks ranks the stock a “Buy.”

The DEA’s newly opened registration portal is being watched as a gauge of institutionalization in the medical cannabis market. But for Canopy Growth, the fundamental question remains whether the company can translate regulatory momentum into operational results. The next quarterly report, expected in the coming weeks, will provide the first real test of that narrative.