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Is Canopy Growth (CGC) Among the Best CBD Stocks to Invest In Right Now?
We recently published a list of 7 Best CBD Stocks To Invest In Right Now. In this article, we are going to take a look at where Canopy Growth Corporation (NASDAQ:CGC) stands against other best CBD stocks to invest in right now.
An essential component of medical marijuana, CBD is the legal, non-psychoactive compound that is used to treat chronic pain, anxiety, and other ailments. Though initially met with skepticism, medical cannabis is rapidly gaining traction in the United States and as of the writing of this article, the use of marijuana for medical purposes is legal in 39 states, in addition to the District of Columbia. The latest state to join the growing list was Nebraska, which voted to legalize and regulate medical cannabis in November 2024.
Despite the growth, 2024 was overall a very turbulent year for the American cannabis sector. The decriminalization process is going slower than expected and legalization ballot measures in Florida, and South and North Dakota failed to pass. Wholesale prices are also at record lows and despite all the efforts, the legal industry still faces stiff competition from the unregulated black market. As a result, the American Cannabis Operator Index, which tracks the market value of firms in the industry, has fallen by over 50% since a year ago, and more than 90% since its peak in April 2019. A recent survey by Whitney Economics revealed that only 27.3% of cannabis operators nationwide are profitable. According to the US Chamber of Commerce, 65.3% of all small businesses in the US are profitable, so the cannabis sector is trailing far behind the national average.
A recent encouraging development came when President-elect Donald Trump publicly expressed support for recreational cannabis legalization efforts in his home state of Florida. He also backed up the industry’s access to the banking system and the ongoing federal cannabis rescheduling process. Whether this support will actually translate into wide-reaching cannabis reform remains to be seen. However, it puts to rest any previous concerns that Donald Trump could actually cancel the rescheduling process altogether if he gets re-elected since the process is under the purview of the US Department of Justice.
The US Cannabis Council, expressing its optimism for the sector under Trump’s presidency, stated:
“The cannabis community has every reason to be optimistic with President Trump returning to the White House. He has endorsed the SAFE Banking Act and reclassification of cannabis. We look forward to working with his administration to advance meaningful federal reform.”
That said, the withdrawal of Matt Gaetz, a vocal proponent of federal legalization, as Trump’s nominee for attorney-general after allegations of sexual misconduct was highly discouraging for the country’s cannabis advocates. Moreover, a great deal of reforms will still have to get through both the House and the Senate, which will require some level of bipartisan cooperation.
As for the federal cannabis rescheduling process, the Drug Enforcement Administration held preliminary hearings on the matter in December and these are expected to conclude in March. Perhaps the most significant relief from the change will come in the form of tax reform. Currently, companies selling cannabis cannot deduct normal business expenses from their tax bill, costing them more than $2.2 billion in extra taxes than what would be paid if they were treated as mainstream businesses. If federal rescheduling happens, it is expected to improve the overall cash flow of the industry by $3.1 billion in 2026, helping improve the profitability of cannabis companies and giving their investors some much-needed optimism, even if Trump’s other promises go up in smoke.
Methodology
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 7 companies operating in the cannabis sector with the highest number of hedge fund investors. When two or more companies had the same number of hedge funds investing in them, we ranked them by the revenue of their last financial year instead. Following are the Best CBD Stocks According to Hedge Funds.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Canopy Growth Corporation (CGC) The Best CBD Stock To Invest In Right Now?
A close-up of a cannabis flower bud in its natural state with a shallow depth of field.
An early mover in the Canadian market, Canopy Growth Corporation (NASDAQ:CGC) engages in the production, distribution, and sale of cannabis and cannabinoid-based products for both adult use and medical purposes. The company consists of several different segments, including Canadian B2B, Canadian medical, rest-of-world cannabis, and Storz & Bickel (a category defining vaporizer technology made in Germany). Canopy Growth’s diversification provides it with a number of potential growth opportunities in the broader cannabis market. Moreover, the company has also recently positioned itself to be a top Canadian entrant in the US market with the acquisition of Wana Wellness, The CIMA Group, Mountain High Products, and most recently, Acreage.
David Klein, CEO of Canopy Growth Corporation (NASDAQ:CGC) stated:
“Completing the acquisition of Acreage marks the final step in establishing Canopy USA as a unified platform which we believe offers significant upside as the Canopy USA portfolio of brands can now capitalize on the rapidly expanding U.S. cannabis market, independent of the need for federal legalization. With a vertically integrated presence across key U.S. states in the Midwest and Northeast, as well as licensing agreements which support asset-light operations in state-legal markets nationally, Canopy USA is well positioned to demonstrate efficient growth ahead.”
Canopy Growth Corporation (NASDAQ:CGC)’s fiscal Q2 2025 report showed that the business is struggling, as it posted a revenue of $45.27 million, down by around 10.2% YoY and missing the analysts’ estimates by $2.63 million. This comes after revenue in Q1 had also fallen by 16% compared to the same period last year. However, the company still witnessed growth across its medical cannabis businesses, with net revenue increasing YoY by 16% in Canada and 12% in international markets. Moreover, Canopy’s Germany-based Storz & Bickel business, known for premium high-margin devices like the Volcano and Venti, delivered an overall net revenue growth of 32% YoY.
Canopy Growth Corporation (NASDAQ:CGC) ended the quarter with $231 million in cash and short-term investments and a total principal debt balance of $574 million. In October, the company further reduced its term loan balance by $100 million by making an early prepayment, a step that will also reduce its annualized interest expenses by approximately $14 million.
To sum it up, Canopy Growth Corporation (NASDAQ:CGC)’s future depends on its ability to grow revenue, reduce debt, and capitalize on the US market – something that the company seems well positioned to do.
Overall, CGC ranks 5th on our list of best CBD stocks to invest in right now. While we acknowledge the potential for CGC to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CGC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
