Can Cannabis Rescheduling Spark a Canopy Growth Comeback?

The potential reclassification of cannabis from a Schedule I to a Schedule III controlled substance under the Trump administration has ignited a wave of optimism in the cannabis sector, particularly for companies like Canopy Growth. This regulatory shift, if finalized, would align cannabis with substances like ketamine and Tylenol with codeine, signaling a historic departure from decades of restrictive federal policy. For Canopy Growth, a firm long plagued by financial headwinds and regulatory uncertainty, the move could represent a pivotal turning point.

Regulatory-Driven Opportunities

The most immediate benefit of rescheduling is the removal of barriers to mainstream financial systems. Currently, cannabis businesses face severe restrictions under the 280E tax rule, which prohibits deductions for ordinary business expenses. According to a Bloomberg report, rescheduling would allow companies to deduct these costs, potentially boosting after-tax profits by 40% to 70% for U.S. operators. For Canopy Growth, which has struggled with profitability despite international revenue streams, this change could unlock significant financial flexibility.

Access to banking services, another critical hurdle, would also improve. As Reuters states, the reclassification would enable banks to serve cannabis businesses without fear of federal prosecution, reducing operational risks and enabling more sophisticated capital-raising strategies. Canopy Growth's financial restructuring, which included reducing its term loan by $50 million and saving $6.5 million annually in interest, positions it to capitalize on these opportunities.

The company's U.S. market preparations further underscore its readiness. Through its "Canopy USA" structure, which includes brands like Wana Brands and Acreage Holdings, Canopy has pre-positioned assets to scale rapidly if federal restrictions ease. Recent financial results highlight progress: in Q2 2026, the firm reported a 30% year-over-year increase in Canada adult-use cannabis revenue and a 17% rise in medical cannabis revenue.

Risks and Challenges

Despite these positives, risks remain. Regulatory fragmentation persists, with cannabis still illegal at the federal level while permitted in over half of U.S. states. As Dentons notes, state-level policies vary widely-from California's tax adjustments to Texas's emergency hemp product rules-complicating compliance and market entry strategies. Canopy Growth must navigate this patchwork while competing against entrenched local players and illicit markets.

Political opposition also looms. While Trump's administration has accelerated the rescheduling process, congressional action is still required for full legalization. Analysts at Vicente LLP caution that rescheduling does not eliminate federal illegality, leaving companies vulnerable to future policy reversals. Additionally, Canopy's recent share dilution-its outstanding shares have grown significantly-raises concerns about long-term shareholder value.

Strategic Positioning and Market Outlook

Canopy Growth's leadership has taken steps to mitigate these risks. Appointing Miles Worne as Managing Director for Europe reinforces its global expansion strategy, particularly in medical cannabis markets. The company's $298 million in liquid assets also provides a buffer as it awaits regulatory clarity. However, analysts have tempered expectations, lowering 2026 revenue forecasts to CA$283.8 million and price targets to CA$2.64, reflecting concerns over ongoing losses and a weaker revenue outlook.

The market has already priced in some of these developments. Canopy's shares surged 50% in December 2025 following rescheduling rumors, with further gains of 27% in premarket trading after subsequent reports. As Proactive Investors notes, sustained growth will depend on the company's ability to execute its U.S. expansion and maintain financial discipline.

Conclusion

Cannabis rescheduling represents a transformative regulatory shift with the potential to catalyze Canopy Growth's resurgence. By easing tax burdens, improving access to banking, and enabling clinical research, the move addresses core industry pain points. However, the company must navigate regulatory fragmentation, political uncertainty, and competitive pressures to fully capitalize on these opportunities. For investors, the key will be monitoring the pace of federal implementation and Canopy's ability to execute its strategic priorities. While the path is not without risks, the regulatory tailwinds suggest that Canopy Growth's comeback may yet be on the horizon.