Canopy Growth Stock Is Setting Up for Long-Term Growth, But Will Investors Wait?

Pot stocks are a riskier investment

Canopy Growth (TSX:WEED) hasn’t had the best luck as of late in terms of share price. After reaching all-time highs around $70 per share, it seems the stock only had one way to go, and that was down. Now, shares continue to hit 52-week lows again and again.

Yet Canopy Growth stock claims that it has long-term plans that are set to make the stock soar. But the big question is whether investors will wait.

What are these plans?

The plans can really be summed up in one word: America.

Canopy Growth stock wants to be the largest producer of cannabis in the future largest consumer of cannabis in the world. That’s the United States. The problem is, the stuff isn’t even legal there yet. Well, not entirely.

States continue to legalize cannabis, at least for medical use, if not entirely for recreational use. And due to this continued process, Canopy Growth stock expects marijuana to become legal in the very near future.

The company wouldn’t be entirely offside to think so. It remains that as these states legalize cannabis, the White House continues to make attempts to decriminalize it. In fact, in recent months Canopy Growth stock climbed, as President Biden announced a pardon for those with simple marijuana possession.

This led to Canopy Growth stock taking a major step forward in their plans of U.S. domination. It went through with the acquisition of Acreage Holdings, which has a major set up across the country. It also continues to shut down production in Canada, showing that it’s serious about a U.S. set-up.

But is this the right move?

Investors don’t think so

Canopy Growth stock has made several moves on this side of the border that investors simply aren’t fans of. This included laying off 800 workers in recent month. That came after the company reported a $266.7 million net loss during the third quarter.

The marijuana market is highly competitive in Canada. But even with that competition, the company stated it would not be lowering prices anytime soon — even as the Ontario Cannabis Store decreased the margins it makes on weed sales.

Given the cost-cutting measures Canopy Growth stock has made in the last few years, it doesn’t come as a surprise. What’s more, the company looks like it will continue to make cost savings a priority, with profit high on the to-do list.

So, while cannabis operations in the U.S. could possibly save the company, it can’t come soon enough. Investors are now fearful that it will ever arrive. And should that be the case, even a major market like the U.S. may not be able to save Canopy Growth stock.

Bottom line

There are a lot of barriers in the way for Canopy Growth stock if it hopes to come out on top in the U.S. Yet the largest, of course, is profit. It has to be said that while it still operates at a loss, this has been a significant improvement over the last few years. The company continues to bring its debts lower and lower. This has been helped along from its investment into non-cannabis products, including the popular BioSteel.

Still, with shares down 75% in the last year, and dropping, Canopy Growth stock remains a risky stock that I would merely keep on your watchlist until legalization truly hits the U.S.

The post Canopy Growth Stock Is Setting Up for Long-Term Growth, But Will Investors Wait? appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has positions in Canopy Growth. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.