Shares of Canopy Growth Corp CGC took a hit on Tuesday 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 world’s largest cannabis companies, saw its stock plummet by 10% to $5.55 Tuesday afternoon. This sharp decline reflects growing investor concern over the extended regulatory uncertainty, which could impact the company’s ability to expand in the U.S., a critical market for its future growth.
The DEA’s delayed ruling has dampened market expectations, particularly for companies like Canopy Growth that were counting on a favorable rescheduling outcome to enhance their U.S. market presence.
With the decision now pushed to an undetermined future date, investors are increasingly cautious about potential regulatory challenges that could slow the company’s growth.
What Else: Political uncertainty has further fueled market volatility. Vice President Kamala Harris, a strong proponent of cannabis reform, was seen as a driving force for federal legalization. However, the possibility of a Trump re-election brings a contrasting scenario, as Trump’s vice-presidential pick has expressed opposition to cannabis legalization. This political uncertainty has created a complex environment for cannabis stocks, adding to investor unease.
Canopy Growth has been strategically positioning itself to capitalize on the U.S. market through partnerships and acquisitions. However, the DEA's delay complicates these efforts, potentially hindering the company's ability to access 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.
Additionally, the delay may affect Canopy Growth's ability to secure further financing or investments, as the regulatory ambiguity could deter investors seeking more clarity on the U.S. market's legal landscape.
How To Buy CGC Stock
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 $5.51 as of publishing time, $100 would buy you 18.15 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.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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