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Last summer, the survival of Canopy Growth was in doubt. This week, the Canadian cannabis company watched its stock rise by about 114%.\u00a0<\/p>\n
On Friday, Germany passed a measure decriminalizing<\/a> possession and home cultivation of cannabis, starting on April 1. The measure won final passage in the Bundesrat, the upper chamber of Germany\u2019s parliament, after some uncertainty. <\/p>\n \u201cThe removal of narcotic status for cannabis is expected to accelerate growth of the German medical cannabis market,\u201d the company said in a statement.<\/p>\n Canopy, whose stock rose nearly 36%<\/a> on Friday upon the news, owns the Germany-based vaporizer firm Storz & Bickel, giving it exposure to Europe\u2019s largest economy. It also offers medical cannabis products through its Canopy Medical unit.<\/p>\n The Friday rally added to an earlier one sparked by U.S. President Joe Biden\u2019s State of the Union address on March 7, in which he mentioned<\/a> the rescheduling of cannabis. Vice President Kamala Harris followed up by<\/a> saying marijuana\u2019s \u201cabsurd\u201d Schedule I classification\u2014which includes heroin and LSD\u2014should be rescheduled \u201cas soon as possible.\u201d<\/p>\n Other cannabis firms, including Tilray Brands and Cronos, also jumped after the news from Germany.\u00a0<\/p>\n Last summer, things looked far bleaker for Canopy. In late June, Benchmark analyst Mike Hickey slashed the price target<\/a> on the company to zero, saying it \u201cmay not be able to continue operations and meet its financial obligations.\u201d At the time, Canopy shares had fallen 78% for the year, and the company had acknowledged a going concern risk in its annual report.\u00a0<\/p>\n Benchmark wasn\u2019t alone in warning about Canopy\u2019s prospects. CIBC Capital Markets analyst John Zamparo wrote that the company was \u201cburning cash despite multiple cost-cutting programs,\u201d adding that even the U.S. legalizing marijuana, if it happened, would be \u201cno savior.\u201d\u00a0<\/p>\n In February last year, Canopy cut its workforce<\/a> by 60%. CEO David Klein cited competition from Canada\u2019s black market, which he estimated accounted for 40% of the nation\u2019s cannabis sales.<\/p>\n \u201cToday, there are two very different cannabis markets in Canada,\u201d he said at the time. \u201cOne that\u2019s legal, highly taxed and regulated, and one that\u2019s thriving and illicit.\u201d\u00a0<\/p>\n Canada legalized the use of recreational marijuana in 2018, the same year that beer-and-wine giant Constellation spent $3.8 billion<\/a> for a 38% stake in Canopy. That deal sent Canopy\u2019s market valuation soaring, putting it in the same league as<\/a> plane maker Bombardier Inc.\u00a0<\/p>\n Disappointment and uncertainty followed, but Canopy appears to be on steadier ground now. <\/p>\n<\/div>\nLow times<\/h2>\n
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