Key Points
-
Canopy Growth is an important player in the marijuana sector.
-
The stock is trading in penny-stock territory.
-
Canopy Growth’s pending earnings restatement isn’t bad news, but it isn’t good news, either.
- 10 stocks we like better than Canopy Growth ›
Most investors should probably avoid Canopy Growth (NASDAQ: CGC). There was early enthusiasm on Wall Street about the opportunity ahead for marijuana companies, but the reality didn’t live up to the excitement. At this point, Canopy Growth has been losing money for years, and the shares have declined so much that it is a penny stock.
And now the company is going to restate two years’ worth of earnings. If you are a Canopy Growth shareholder, or are thinking of becoming one, here is what you need to know right now.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
The marijuana business is still competitive
One of the big problems with the marijuana sector is that too many competitors jumped in too quickly. That resulted in intense competition in a market that was still young and evolving. Despite ongoing legalization, the result of this competition has been weak financial performance for companies like Canopy Growth. It is hardly alone, noting that Tilray Brands (NASDAQ: TLRY), Cronos Group (NASDAQ: CRON), and Aurora Cannabis (NASDAQ: ACB) have all been struggling to achieve sustainably profitability.
Worse, legal marijuana companies aren’t the only competitive threat. The illicit sale of marijuana didn’t stop just because the drug has become increasingly legal to sell. And since legal sellers such as Canopy Growth have to face regulatory costs and taxes, they are being undercut on price by illegally sold marijuana.
Only more aggressive investors should consider investing in a sector that remains complex and evolving. Further, money-losing penny stocks are risky, too, so Canopy Growth has multiple high-risk features to consider before hitting the buy button.
Canopy Growth is restating its results
And now the company has announced it will restate its financial results over the past two years. Investors would be entirely justified in being concerned about a company’s internal controls following a restatement, particularly if the company was losing money and the stock was trading in penny-stock land.
Not surprisingly, Canopy Growth’s stock fell after the news was released. As investors digested the announcement, however, the stock has recovered. That, too, makes sense, given the explanation for the restatement. According to the company:
During the Company’s year-end financial reporting process for the fiscal year ended March 31, 2026, the Company identified a technical non-cash accounting error. The Company determined that certain share-settled warrants with exercise prices denominated in U.S. dollars, first issued during the fiscal year ended March 31, 2024, should have been classified as liabilities rather than equity instruments under applicable accounting standards, given the Company’s Canadian dollar functional currency. Accordingly, the Company should have recorded these instruments as liabilities on its consolidated balance sheets and measured them at fair value at each reporting date, with changes in fair value recorded in the consolidated statements of operations and comprehensive loss.
That is a mouthful, but the big story is that these changes aren’t expected to impact “revenue, gross margin, operating income/loss and cash flows from operations; Adjusted EBITDA or other key non-GAAP performance metrics used by management and investors; total assets, cash balances, liquidity, or ability to meet obligations or fund operations; compliance with any debt covenants, contractual ratios or borrowing capacity.”
When you step back, it appears to be a technical accounting issue that won’t negatively impact anything important. And, perhaps even more notable, the company believes the restatement won’t impact “the trajectory or narrative of financial performance.” In other words, if you bought Canopy Growth before the restatement news, there’s probably no reason for you to sell it.
Investors should still tread with caution with Canopy Growth
That said, shareholders should pay close attention to the restatement as more information becomes available. The big date is June 15, when Canopy Growth reports fiscal 2026 earnings. Investors considering buying the stock should probably wait to jump aboard until after the restatements are complete, just in case. Most investors, meanwhile, will likely be better off avoiding a money-losing penny stock that is in the middle of a restatement. Until the company is sustainably profitable, the risk/reward profile remains tilted in a worrying direction.
Should you buy stock in Canopy Growth right now?
Before you buy stock in Canopy Growth, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Canopy Growth wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $481,589!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,345,714!*
Now, it’s worth noting Stock Advisor’s total average return is 993% — a market-crushing outperformance compared to 208% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 22, 2026.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cronos Group. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
