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Shares of Canopy Growth Corp (NASDAQ:CGC) shares are trading lower by 15.8% to $5.24 this week after the U.S. Drug Enforcement Administration (DEA) announced a delay in its decision on rescheduling cannabis.
The ruling, now postponed until after the November presidential election, has injected new uncertainty into the cannabis market, leading to widespread selling across the sector.
What Happened: Canopy Growth, one of the largest cannabis companies globally, experienced a 15% drop this week following an update from the DEA. This significant decline underscores growing investor concerns over prolonged regulatory uncertainty, which could hinder the company's expansion efforts in the U.S., a key market for its future growth.
The DEA's delayed decision has dampened market expectations, especially for companies like Canopy Growth that were relying on a favorable rescheduling outcome to strengthen their U.S. market position.
With the decision now postponed indefinitely, investors are becoming more cautious about potential regulatory obstacles that could impede the company's growth.
What Else: Political uncertainty continues to heighten market volatility. Vice President Kamala Harris, a staunch advocate for cannabis reform, has been viewed as a pivotal figure in pushing for federal legalization. However, the potential re-election of Donald Trump presents a contrasting outlook, as his vice-presidential candidate opposes cannabis legalization. This uncertainty creates a challenging landscape for cannabis stocks, contributing to investor anxiety.
Canopy Growth has been strategically positioning itself to capitalize on the U.S. market through partnerships and acquisitions. However, delays from the DEA complicate these efforts, potentially hindering the company's ability to enter the U.S. market under favorable regulatory conditions.
This uncertainty could slow Canopy's expansion plans, putting pressure on its revenue growth and profitability in the near term.
Furthermore, the delay may impact Canopy Growth’s ability to secure additional financing or investments, as regulatory ambiguity may deter investors seeking more clarity on the U.S. market's legal landscape.
Read Also: DEA Schedules Hearing On Proposed Ban Of Psychedelic Compounds With Therapeutic Potential
By now you're likely curious about how to participate in the market for Canopy Growth – be it to purchase shares, or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, or Amazon.com, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.
In the the case of Canopy Growth, which is trading at $5.16 as of publishing time, $100 would buy you 19.38 shares of stock.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.
According to data from Benzinga Pro, CGC has a 52-week high of $19.20 and a 52-week low of $2.76.
Posted In: CGC
