Speculation Over Trump’s Cannabis Policy Ignites Canopy Growth Shares

Shares of Canadian cannabis producer Canopy Growth experienced an extraordinary surge in trading on Friday, December 12. The stock price skyrocketed by approximately 52 percent, a move of exceptional magnitude even within the notoriously volatile marijuana sector. This rally propelled the company's market capitalization to around $641 million. The catalyst was a potent rumor circulating in Washington, D.C., suggesting that President-elect Donald Trump intends to issue an executive order reclassifying cannabis under federal law.

Market speculation centers on a potential administrative shift that would see cannabis moved from its current status as a Schedule I substance to the less restrictive Schedule III category. Such a reclassification would constitute a historic policy change, formally acknowledging the plant's accepted medical use. Crucially, it would also eliminate the crippling Section 280E tax provision, which currently prohibits cannabis businesses from deducting standard operating expenses, imposing a severe financial burden on the entire industry.

Conflicting reports regarding the timing of any potential announcement have added fuel to the volatility. While The Washington Post indicated a planned executive order in January, coinciding with the presidential inauguration, CNBC cited sources pointing to a possible announcement as early as the coming Monday. This discrepancy has attracted algorithmic traders and speculators betting on imminent news, further amplifying price movements.

Technical Factors Amplify the Gains

The dramatic price advance was intensified by activity in the derivatives market. Trading volume for call options exploded on Friday, soaring 77 percent above the average. More than 43,000 contracts changed hands. This aggressive positioning in bullish options is indicative of a gamma squeeze dynamic: to hedge their exposure from the rising value of these calls, market makers are compelled to purchase the underlying stock, creating additional upward pressure on the share price.

Should investors sell immediately? Or is it worth buying Canopy Growth?

Canopy Growth did not move in isolation. The broader Canadian cannabis sector rallied, with competitors including Tilray Brands and Aurora Cannabis also posting double-digit percentage gains. However, the momentum behind Canopy Growth was particularly pronounced.

Underlying Business Fundamentals Remain Challenged

Beyond the political speculation, the company's fundamental picture presents a more tempered outlook. For its second quarter of fiscal year 2026, reported on November 7, Canopy Growth posted a six percent increase in net revenue to $67 million. Its core cannabis segment showed stronger momentum, growing twelve percent to $51 million. This was driven in part by a 30 percent expansion in the Canadian recreational market, fueled by new vaporizer and pre-rolled product offerings.

Despite these operational improvements, the company continues to report net losses. Consequently, the recent surge in its stock price is viewed primarily as a bet on transformative U.S. regulatory reform rather than a reflection of imminent corporate profitability.

The trading sessions ahead will determine whether the rumors hold substance or lead to market disappointment. Should an executive order materialize imminently, elevated volatility is likely to persist. If the timeline extends into January, the speculative fervor could quickly dissipate.