Trump’s Marijuana Order Is Stuck at the DEA. Here’s What That Means for Canopy Growth.

Last December, President Donald Trump issued Executive Order 14370, intended to fast-track the rescheduling of marijuana to Schedule III, in turn paving the way for federal regulatory clarity. At the time, marijuana stocks, including Canopy Growth (NASDAQ: CGC), surged sharply on the news, with Canopy itself surging from $1.15 to nearly $2 per share.

Shares have since coughed back these gains and then some, with Canopy tumbling on the recent action, or more accurately, inaction, regarding rescheduling. That said, keep in mind that larger issues, unrelated to this factor, still loom for the company.

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A weed trimmer trims marijuana plants in a licensed production facility.
Image source: Getty Images

The latest on the DEA’s rescheduling efforts

On Sept. 29, Derek C. Julius, Chief Administrative Judge of the Drug Enforcement Administration, issued a temporary stay on the aforementioned marijuana rescheduling process, in response to calls from several parties to issue a stay, for a briefing to be completed on a recently released report on the marijuana rescheduling plan from the U.S. Government Accountability Office (GAO).

The judge gave the DEA until Oct. 13 to respond; on Oct. 9, the DEA filed its response, objecting to the briefing request but deferring to the judge. In response, Judge Julius granted another stay, to allow the anti-rescheduling parties to respond to the DEA’s response.

The silver lining for Canopy Growth

Canopy Growth stock may be tumbling on this news, but keep in mind how this remains a secondary factor for the Canada-based marijuana company. Although Canopy has a U.S. affiliate, Canopy USA, Canada remains its largest market.

Issues within the Canadian recreational marijuana market are creating the greatest headwinds for the company. Yet while investors may be bidding Canopy lower for perhaps the wrong reasons, don’t assume there’s merit in going contrarian.

For Canopy, issues such as persistent operating losses, as well as the risk that the company taps further into its dilutive $200 million at-the-market (ATM) equity program to raise more capital, call into question its $300 million valuation. When deciding whether to buy or sell Canopy Growth, consider these factors, not U.S. rescheduling news, more strongly.

Should you buy stock in Canopy Growth right now?

Before you buy stock in Canopy Growth, consider this:

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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Trump’s Marijuana Order Is Stuck at the DEA. Here’s What That Means for Canopy Growth. was originally published by The Motley Fool

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