Last summer, Canopy Growth’s survival was in doubt. This week, the Canadian cannabis company saw its shares rise by approximately 114%.
On Friday, Germany decided on a measure decriminalize Possession and home cultivation of cannabis will be banned from April 1st. After some uncertainty, the measure was finally passed in the Federal Council.
“The removal of the narcotic status for cannabis is expected to accelerate the growth of the German medical cannabis market,” the company said in a statement.
Canopy, its existence increased by almost 36% On Friday, following the news, the Germany-based vaporizer company owns Storz & Bickel, giving it exposure to Europe’s largest economy. The company also offers medical cannabis products through its Canopy Medical division.
Friday’s rally complemented an earlier rally sparked by US President Joe Biden’s State of the Union address on March 7, in which he mentioned the rescheduling of cannabis. Vice President Kamala Harris followed by The “absurd” classification of marijuana in Schedule I – which includes heroin and LSD – should be changed “as soon as possible”.
Other cannabis companies, including Tilray Brands and Cronos, also jumped following the news from Germany.
Low times
Things looked much bleaker for Canopy last summer. At the end of June, benchmark analyst Mike Hickey the price target lowered The company is zeroed out and explains that it “may not be able to continue operations and meet its financial obligations.” At that point, Canopy shares had fallen 78% for the year, and the company had acknowledged risk to its continued existence in its annual report.
Benchmark wasn’t alone in warning about Canopy’s prospects. John Zamparo, an analyst at CIBC Capital Markets, wrote that the company is “burning cash despite several cost-cutting programs,” adding that even legalization of marijuana in the U.S., if it happens, “wouldn’t be a savior.”
In February last year, Canopy reduce its workforce by 60%. CEO David Klein cited competition from Canada’s black market, which he estimated accounts for 40% of the country’s cannabis sales.
“Today there are two very different cannabis markets in Canada,” he said at the time. “One that is legal, heavily taxed and regulated, and one that is thriving and illegal.”
Canada legalized recreational marijuana use in 2018, the same year as beer and wine giant Constellation Spent $3.8 billion for a 38 percent stake in Canopy. That deal sent Canopy’s market valuation soaring and caused it to stall the same league as Aircraft manufacturer Bombardier Inc.
Disappointment and uncertainty followed, but Canopy now appears to be on more stable ground.