Last week, U.S. President Donald Trump signed an executive order to reclassify cannabis from the strictest Schedule I category to the less restrictive Schedule III under the federal Controlled Substances Act. The move, seen as the most significant shift in U.S. cannabis policy since 1970, triggered a sharp rally in marijuana stocks, with Canadian cannabis giant Canopy Growth (TSX:WEED) soaring more than 50% in a single session.
However, the company remains deeply distressed, with its stock down more than 99% from all-time highs and having halved in value during 2025 alone. The long-awaited policy shift raises a critical question: Can this regulatory relief truly revive the struggling industry and become a turning point for Canopy Growth in 2026?
The executive order aims to remove barriers to medical research and alleviate long-standing financial and tax burdens on the cannabis sector. By moving cannabis to Schedule III—a category that includes certain prescription painkillers—the federal government now formally acknowledges its accepted medical use.
The most immediate impact of the reclassification could be the unlocking of two major constraints that have hampered the industry for years: taxation and access to financial services.
Analyst Ed Groshans noted that the change could “open the doors for banks.” Currently, due to the federal ban, most financial institutions avoid the cannabis space, leading to high financing costs for businesses. Rescheduling is expected to allow cannabis companies to access traditional banking systems and potentially be freed from the burdensome Section 280E tax provision, which prohibits deductions for ordinary business expenses—thereby significantly improving profitability.
Amid the policy-driven market euphoria, Canopy Growth’s stock surged, yet the company’s fundamentals reveal ongoing challenges.
In its fiscal second quarter ended September 2026, the company showed modest improvements: its adjusted EBITDA loss narrowed to CAD 3 million, revenue rose 12% year-over-year to CAD 51 million, and it removed the going-concern warning that had previously overshadowed its operations. Through cost-cutting, focusing on core markets such as its adult-use segment (which grew 30%), and optimizing its debt structure—holding nearly CAD 300 million in cash with no major debt maturities until September 2027—Canopy Growth is fighting to sustain itself.
Analysts project that the cannabis producer’s revenue could grow from CAD 281.6 million in fiscal 2026 to CAD 377 million by fiscal 2030. The U.S. policy shift undoubtedly provides a potential catalyst for growth.
Nevertheless, legal experts caution that the rescheduling is only a partial victory. Shawn Hauser, partner at Vicente LLP, emphasized that reclassification does not equal federal legalization, and the industry must continue to push for congressional legislation to establish a more comprehensive regulatory framework. President Trump himself reiterated that cannabis remains illegal at the federal level, and state laws continue to create a complex patchwork.
For Canopy Growth, even with improved financial and tax conditions, a true recovery will depend on its ability to enhance profitability, streamline its underperforming international operations, and capture market share in the highly competitive U.S. landscape.
Trump’s executive order has opened a critical policy window for the global cannabis industry, particularly for Canadian companies like Canopy Growth that have long eyed the U.S. market. The year 2026 will be a key test of whether regulatory gains can translate into tangible profit and growth. Still, the path to full normalization remains long, and the fate of cannabis companies will ultimately hinge on their ability to strengthen their operations while seizing this hard-earned breathing space.
