Remember that old Wall Street saying “buy the rumor, sell the news”? Well, Canopy Growth (CGC) just gave everyone a masterclass in exactly why that phrase exists – and it wasn’t pretty.
Here’s what went down: For days, whispers about Trump signing an executive order to fast-track marijuana rescheduling had cannabis stocks going absolutely bonkers. Canopy Growth shot up 110% on pure speculation alone. Then this morning, when sources confirmed Trump would actually sign the thing, CGC jumped another 24%. Investors were practically doing victory laps.
But then reality crashed the party harder than a college freshman at their first kegger.
The moment Trump actually put pen to paper, directing the Attorney General to speed up moving weed from Schedule I to Schedule III, investors suddenly remembered how to read the fine print. CGC plummeted 12% by close, proving once again that sometimes the anticipation is way better than the actual event.
Why Everyone Hit the Panic Button
Look, the profit-taking wasn’t irrational panic – it was actually pretty smart. Sure, rescheduling marijuana is huge long-term. It acknowledges that cannabis has medical benefits, makes research easier, and could give companies some sweet tax relief under IRS Section 280E (because yes, the tax code is that specific about drug classifications).
But here’s the thing nobody wanted to admit during the hype: this executive order doesn’t magically make everything better overnight. It just tells the DEA to hurry up with paperwork they were already doing. We’re talking 12-18 months of bureaucratic slog involving public comments, reviews, and all the other fun stuff that makes government wheels turn at the speed of molasses.
No sudden flood of institutional money. No immediate operational windfalls. Banks are still going to be sketchy about cannabis companies, and full federal legalization is still somewhere in the “maybe someday” category.
Canopy’s Got Bigger Problems
Even if the regulatory stuff gets sorted out tomorrow, Canopy Growth has some serious homework to do. The company’s been dealing with high debt from their “let’s buy everything” phase, multiple restructuring attempts, and the kind of inconsistent profitability that makes CFOs break out in cold sweats.
Their Canadian market – you know, where cannabis is actually legal – has been stagnant or declining. Meanwhile, they’re competing in a market where illegal dealers still undercut legal prices, and consumers are increasingly choosing value products over premium options. It’s like trying to sell artisanal water when everyone’s happy with the tap.
The Bottom Line
Canopy wasn’t alone in its post-signing nosedive. Tilray dropped 4.2%, Aurora Cannabis fell 3.4% – basically, the entire sector got a reality check delivered via stock ticker.
Don’t get me wrong – Trump’s executive order is genuinely good news for the long-term cannabis investment thesis. But “long-term” is the key phrase here. Smart money knows there’s plenty of time to figure out which companies will actually benefit when the regulatory dust settles.
Sometimes the best investment strategy is just patience – and maybe not getting caught up in the hype when everyone else is losing their minds over rumors.