Agricultural Commodities/Milling · #82 in the Retail 100

Canopy Growth

CGC

Pot stocks chase rescheduling headlines↑

Our rating: hold
12-month target: $0.79 +15.7%
Expected vs. S&P 500: -2.8 ptsSee the math
Next earnings: Nov 6Tomorrow

Canopy can take over its U.S. brands only once Nasdaq and the NYSE list owners of U.S. recreational marijuana businesses, a call for the exchanges, not the DEA.

Summary

Canopy Growth sells recreational and medical cannabis in Canada, ships medical cannabis to Europe, and owns Storz & Bickel, a German vaporizer maker with about a quarter of sales. Years of losses forced so many stock sales that its share count roughly quadrupled in two years, though it now holds more cash than debt. Its U.S. brands sit in Canopy USA, which it can take over only once U.S. exchanges list such owners; rescheduling alone won't do it. Until then, the stock rests on the rest turning profitable.

$0.70

-$0.50 (-41.67%)Past year

What Canopy Growth does

Canopy Growth is one of Canada's largest licensed cannabis producers, selling to provincial wholesalers and straight to medical patients. It also owns Storz & Bickel, a German vaporizer maker with higher margins.^3,4

What it sells

Canada recreational cannabis33% of revenue, FY2026
Flower, pre-rolls, gummies and vapes under brands like Tweed, 7ACRES and DOJA, sold through every province's wholesaler. Grew 20% last year.
Canada medical cannabis32% of revenue, FY2026
Sold to patients through Spectrum Therapeutics and Canopy's own clinics. Insured patients drive growth; a cut in veterans' reimbursement is a drag.
Storz & Bickel vaporizers25% of revenue, FY2026
Premium herbal vaporizers such as the Volcano and Mighty, some registered as medical devices. Sales fell 14% last year.
International medical cannabis10% of revenue, FY2026
Medical flower and oils for Germany, Poland and Australia. Fell 7% last year on supply problems, but management calls Europe a big opportunity.

Who buys it

Provincial cannabis wholesalers, which supply licensed stores; Canopy has supply deals in every province and territory. Medical patients buy directly through its Apollo, Canada House and Abba Medix clinics. Vaporizers sell in over 100 markets.

Where you've seen it

Volcano and Mighty vaporizers, sold in over 100 markets, are made by Canopy's Storz & Bickel in Germany.

How the business makes money

The backstory

Canopy has lost money for years; its fiscal 2026 net loss was C$263M. To stay afloat it sold stock repeatedly, raising about C$374M from shares and warrants in fiscal 2026 alone. In January it refinanced, pushing all debt to 2031 or later. CEO Luc Mongeau's plan is to grow better flower more cheaply, sell more to medical patients in Canada and Europe, and reach positive adjusted EBITDA this fiscal year.

Canopy makes money when its flower is good and cheap enough to sell at medical prices, in Canada and Europe, while vaporizers add high-margin sales. The profit then has to cover expensive interest before any cash is left.^{1,3,4,5,15,24}

1 · SupplyBetter flowerHigher yields cut cost per gram. The MTL Cannabis purchase added craft flower and genetics, and Canopy is reworking how it grows.
2 · DemandMedical patientsPatients pay more than store shoppers. Canopy's own clinics send them straight to its products, and medical sales grew 22% last quarter.
3 · New revenueEurope exportsCertified plants open Germany and Poland. Canopy relaunched Tweed in Germany in May using MTL strains, and a new Germany country manager started October 1.
4 · Cash engineVaporizersStorz & Bickel adds higher-margin sales. Its devices sell to cannabis users in markets where Canopy cannot sell cannabis itself.
5 · MarginBreak evenCosts must fall below gross profit. The adjusted EBITDA loss shrank by more than half last quarter, but it is still a loss.
6 · PayoutNo new sharesProfit has to cover interest first. Only then does cash stop shrinking, and only then can Canopy stop selling stock.

Advantages

Canopy says it leads Canada's medical cannabis

Strong advantage

Matters most, because medical is the steadier part of Canadian cannabis. Canopy says it is Canada's leading medical cannabis supplier by revenue, selling through Spectrum Therapeutics and its Apollo, Canada House and Abba Medix clinics, which help patients get prescriptions and insurance reimbursement.^3,4,1

Storz & Bickel's medical-grade vaporizers

Strong advantage

An edge that doesn't depend on cannabis prices. Its Volcano Medic 2 and Mighty+ Medic are registered medical devices in the EU, Canada, Australia and the UK, and its vaporizers sell in over 100 markets, reaching cannabis users where Canopy cannot sell cannabis itself.⁴

Certified to supply Europe

Supporting

Helpful but copyable. Canopy says its Smiths Falls plant is Canada's only site with EU GMP approval for softgels, oils and flower packaging together, but Aurora and Organigram already sell far more in Europe.^14,16,17

What's changing

Another reverse split and an auditor exit

Nasdaq warned on October 14 that the shares had closed below $1 for 30 business days; Canopy has until April 12, 2027 to recover. On October 23 shareholders let the board combine every 5 to 15 shares into one. The stock is down about 28% since September 29, when a DEA judge paused the hearing on rescheduling all marijuana. In August its auditor quit, citing an exit from cannabis.^6,7,8,9

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Canopy Growth
Canopy Growththis stock	$317M	Canopy Growth is one of Canada's largest licensed cannabis producers, selling to provincial wholesalers and straight to medical patients. It also owns Storz & Bickel, a German vaporizer maker with higher margins.
Aurora CannabisACB	$259M	Canadian grower that left recreational cannabis to sell medical cannabis abroad, mostly Germany.	Aurora sells over four times as much abroad; Canopy still leans on Canada.^16,1
OrganigramOGI	—	Canada's top recreational seller by its own count; bought German medical seller Sanity Group.	Organigram wins Canadian store shelves; Canopy's Canadian strength is medical patients.¹⁷
Tilray BrandsTLRY	$403M	Canadian and European cannabis plus craft beer and spirits, including BrewDog, bought to diversify.	Tilray diversified into beer as cannabis sales fell; Canopy bet on vaporizers and medical.¹⁸

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Will Canopy post positive adjusted EBITDA in a quarter before its fiscal year ends in March 2027, after a C$3.2M loss in the June quarter?^{1,2,3,5,14,25,8}

Bull case: why buyers buy

If cultivation fixes and European sales keep lifting margins, Canopy breaks even, keeps its cash, and the share count finally stops growing.

The balance sheet is repaired for now. After the January refinancing, its loans and convertible notes don't mature until 2031.
Margins are rising. Adjusted gross margin climbed to 31% last quarter from 25% a year earlier, and management expects cultivation changes to lift it further.
Europe is opening up. Two Canadian sites now hold EU GMP certification, the European drug-quality standard, so Canopy can ship medical flower to Germany, Poland and the UK.
Vaporizers earn more per sale. Storz & Bickel's gross margin was 33% last fiscal year, against 22% for cannabis.

Bear case: why sellers sell

If losses linger, cash keeps leaving at expensive interest rates, and Canopy goes back to selling shares, which shrinks every holder's stake again.

Cash is still leaving. Free cash flow (cash left after running the business and paying for capital spending) was negative C$25.7M last quarter, double a year earlier.
The debt is costly and starts coming back. The US$162M term loan charges at least 9.5%, and from early 2027 lenders can demand US$3M a month.
Some growth was bought. MTL Cannabis, acquired this year, added flower to both Canadian segments, so growth without it is lower.
Its reported numbers need extra checking. Canopy restated two years of results over how it classed warrants, its controls were still rated ineffective in June, and its auditor then quit.

Where Delphi landsholdWe think today's price already weighs both sides fairly.See why

What to watch

The numbers that will settle the debate.

Adjusted EBITDA▲ improving

-C$3.2M in the June quarter, from -C$7.9M a year earlier^1,3

Shows whether Canopy can stop burning cash. Management targets a positive figure during this fiscal year.

Canada cannabis sales growth▲ improving

Medical +22% and recreational +10% from a year earlier in the June quarter, helped by MTL¹

Recreational and medical together are about two-thirds of revenue, so their growth carries the company.

Storz & Bickel sales and margin■ unclear

C$16.1M, up 6%; 48% gross margin, partly lifted by a one-time tariff recovery¹

A quarter of revenue at a higher margin than cannabis, so it decides how fast losses close.

Next earnings report

Nov 6

Tomorrow

Expected earnings per share: -$0.03
Expected revenue: —

What to listen for: Whether adjusted EBITDA turns positive without the tariff recovery that lifted Storz & Bickel last quarter.^11,13

What would prove this wrong

✕Adjusted EBITDA is still negative when fiscal 2027 ends in March.
✕Canopy resumes selling shares through its at-the-market program before reaching break-even.
✕Acreage's lenders foreclose after forbearance ends January 31, 2027, cutting Canopy USA's value.
✕Storz & Bickel sales keep falling once the tariff recovery is gone.

Our ratingHoldas of Nov 2 close, $0.68 · what ratings mean

Canopy now holds more cash than debt and forecasts call for steady sales growth, but it still loses money, so expected gains roughly match the S&P 500.

12-month target: $0.79 (+15.7%)
S&P 500, same method, with dividends: +18.5%
Expected vs the market: -2.8 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $0.68

Target $0.79

bull case20% likely

$0.95 +40%

Adjusted EBITDA turns positive by March 2027, European medical sales keep climbing, and sales reach the top of forecasts with no new share sales.

$0.61 sales per share × 1.5 = $0.95

base case50% likely

$0.84 +24%

Sales grow about 8% next year as forecast, losses shrink toward break-even, and a reverse split keeps the Nasdaq listing.

$0.60 sales per share × 1.4 = $0.84

bear case30% likely

$0.59 -13%

Adjusted EBITDA stays negative, cash keeps draining, Acreage's lenders foreclose, and Canopy returns to selling shares.

$0.57 sales per share × 1 = $0.59

Why these odds: Sales forecasts call for steady growth, but only one analyst publishes earnings estimates, and the DEA hearing is paused. Cash of C$337M covers expected burn and loan repayments beyond a six-month buffer, and the convertible notes and warrants convert far above today's price, so we assume today's 449.3M shares.

How the prices are built: Wall Street expects sales per share of $0.60 for the year starting a year from now (analysts range from $0.54 to $0.63). Today the stock trades at 1.2 times next year's sales per share; its five-year middle is 2.58.^1,2,11,20,21

What tests the call: Fiscal Q2 2027 earnings (Nov 6)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 28; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $0.68, Canopy Growth is cheaper than usual against its own sales

Canopy Growth trades at 1.2 times the sales analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's sales. That is cheaper than it has been 80% of the time over the past five years, when the middle was 2.6.

Analysts expect sales to grow about 8% the year after.

Canopy Growth multiple: 1.2×
Its usual multiple: 2.6×
Base case: +24%
Bear case: −13%

The skewOur bear case loses about 56¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

FQ1 2027 results, reported Aug 7

Every business grew, adjusted gross margin rose to 31%, and the adjusted EBITDA loss narrowed by more than half.^1,19,23

Reported Aug 7	Expected	Actual	Difference
Earnings per share	-$0.04	-$0.02	+50.0%
Revenue	—	—	—

Beat expectations in 2 of the last 6 quarters

Stock reaction: Up about 4% on the day by closing prices ($0.93 to $0.97)

Why the stock moved

Up: the loss was half what analysts expected, and all four businesses grew.
Up: management repeated that results will improve most in the second half as MTL is folded in.
Held back: revenue came in about 2% below forecasts.
Held back: free cash flow worsened on working-capital timing.

What it means for the stock: Strengthened the break-even case. The open question is whether margins hold once the one-time tariff recovery is gone.