Shares of Canopy Growth (TSX:WEED) have absolutely surged in the last two weeks, leaving many investors wondering what on earth is going on. Canopy Growth stock was hitting 52-week lows before that point, after all.
So let’s take a look at why everyone is talking about Canopy Growth stock, and whether you might want to consider it as well.
What happened: The U.S.
A number of factors are colliding to create this increase in share price. Canopy Growth stock first received a boost after news from the United States. Vice President Kamala Harris of the U.S. stated that the Drug Enforcement Administration (DEA) needed to speed up the process of rescheduling marijuana.
Right now, cannabis is considered a Schedule I narcotic. This puts it on the same level as something like cocaine. Meanwhile, a drug like fentanyl is considered a Schedule III narcotic, as it’s supposed to be for medical use. Harris argued for the rescheduling down to Schedule III, and the DEA has been working to speed up the process.
This could be huge for moving towards legalization in the country, where Canopy Growth stock has a large presence. It continues to be heavily invested in the future of cannabis in the U.S., which should become the world’s largest consumer of cannabis. And with 40 states already legalizing the product, it doesn’t look too far off.
What happened: Germany
Another area where Canopy Growth stock has a reasonably high investment is in Germany. The country is the largest in Europe in terms of gross domestic product (GDP), making it highly valuable should it legalize cannabis.
Which all indications are that, as of April 1, it will! The country announced as of the first of next month, cannabis would be considered a non-narcotic, marking a huge shift in the country. The shift would mean the company can expand its commercial presence in Germany – specifically, through its Storz & Bickel vaporizer brand.
This would create even more revenue for the cannabis stock, which desperately needs it. Canopy Growth stock still hasn’t made a profit, selling off production houses and non-core assets to make up cash. But even more good news came its way.
What happened: Canada
More good news also came from Canada, where a government group studied the impacts of legalization legislation in Canada. The group was tasked with reviewing the taxes charged to pot producers. It found that the excise tax is the problem, put in place when the average price of cannabis was far higher than today’s prices.
So now, the government group stated there needs to be an update to the tax policy that would reduce taxes. And, of course, fewer taxes means more cash in hand. So this is now just a review, but it’s likely that the federal government will make some moves fairly soon.
When that happens, investors may see shares climb even higher for Canopy Growth stock. For now, however, it remains risky. The pot stock more than doubled in the last two weeks, but investors became wary after $10 per share. As of writing shares were down 12%, peaking at $10 per share. So while the company has more investor interest, it isn’t out of the woods yet.
