The stock market’s love affair with Canopy Growth Corporation (NYSE: CGC) is over. And if you’re holding on to your shares of this one-time heartthrob in the marijuana space, then you’re facing a bitter Valentine’s Day with nothing but broken promises and heartache for your trouble. Yeah, it’s easy to be jaded about CGC stock.

After all, this is a company that seemed destined for greatness. Just a year ago, experts were lauding Canopy Growth as one of the best cannabis stocks you can buy as marijuana legalization eases into the United States.

Canada-based Canopy was the first publicly traded cannabis company in North America and sells both recreational and medicinal marijuana in Canada, where roughly 90% of its sales are based.

Canopy also has a partnership with Constellation Brands (NYSE: STZ), which bought into Canopy for a cool $4 billion in 2018. All the pieces were in place for CGC to be a dominant marijuana stock, with a first-mover advantage into the U.S. and an array of products at its disposal.

So what happened?

The Cold Reality for CGC Stock

Late last year, Canopy made the press rounds touting its Cannabis 2.0 portfolio, which included everything from distilled beverages to chocolates, vape pens and cartridges.

“With the coming of Cannabis 2.0, our goal is to provide customers with the best quality products, and I truly believe through the hard work and dedication of our team, we have delivered just that,” CEO Mark Zekulin said.

It sounded awesome. But the reality is a different story.

On Jan. 17, CGC disclosed that it hasn’t been able to scale up its cannabis-infused beverage production. And, yeah, it’s hard to make a big profit from cucumber and mint-flavored cannabis drinks if you can’t mass produce them.

And about those chocolates? Analyst Jerome Has of Lightwater Partners doubts that they will appeal to recreational users because the price point is too high and the level of THC is too low. He says:

“People are already talking about how expensive [the 2.0 products] are and that’s going to have to come down because people can do the math pretty quickly. When you buy a chocolate bar in five portions with 2 milligrams of THC in each portion, that won’t appeal to an experienced user.”

Canopy Has a Cash Crunch

Just five months after breaking the $50-per-share barrier, CGC shares are down 56% with no real sign of improvement in the near future. The company lost 84 cents per share when it reported Q3 earnings on Nov. 14 – missing estimates by a whopping 56 cents. Revenue was $57.8 million, which missed estimates by more than $21 million.

Even more troubling, according to Winds Research, is that CGC appears to face a significant cash flow problem in the near future. In a research note, Winds says that the company will likely have an aggregate cash burn of $633.4 million this fiscal year, cutting its available cash to less than $1 billion.

“So by the end of the current calendar year, and assuming Canopy Growth takes no reasonable cost-cutting actions, the company would find itself in a position where it needs to raise more cash through the continued dilution of an embattled shareholder base,” Winds says.

It’s not terribly surprising that Canopy would have cash issues since it’s dumping cash into creating product lines but having problems with production. But the company’s way out of the mess doesn’t make a lot of sense, either.

Canopy Is Doubling Down on the Wrong Products

Nobody goes to Popeye’s to get a slice of cheesecake. And nobody hits up McDonald’s (NYSE: MCD) because they want a great salad.

So are you really going to get your cannabis fix with a bottle of passion fruit and guava water? No, according to the evidence.

Stone Fox Capital recently cited a 2019 study by Deliotte that shows a vast preference the Canadian market has in edible cannabis products – not liquids, vapes or concentrates.

• Edibles – $1.6 billion
• Cannabis-infused beverages – $529 million
• Topicals – $174 million
• Concentrates – $140 million
• Tinctures – $116 million
• Capsules – $114 million

Edible products dominate the market. And considering that Canada was widely considered to be a great harbinger of what companies should expect as cannabis is legalized in the much-larger U.S. market, that data’s super-important. It’s logical to believe that when the U.S. market fully opens, edible products (provided they aren’t overpriced) will be big hits here, too.

But CGC – thanks to its partnership with Constellation Brands – is all-in on cannabis-infused beverages. And that’s going to continue, thanks to that $4 billion investment. Canopy recently announced that STZ board member Judy Schmeling is joining the Canopy Growth board, and Constellation’s chief marketing officer was appointed to the board in principle and will be an observer.

“These appointments are not surprising, in our view, as Constellation has continued to tighten its grip on Canopy since the ousting of Bruce Linton, aiming to stymie large quarterly losses that flow through to its own P&L.” analyst Brett Hundley wrote in a note this week.

The Bottom Line on CGC Stock

Canopy Growth has every sign of being a complete heartbreaker for loyal investors who just want to be loved (with a good return). It had great potential, but its cash flow, production and its emphasis on beverages is going to keep CGC from being the market leader in the U.S. of which it seemed destined.

The company’s next earnings report – coincidentally, it’s coming out just before Valentine’s Day, on Feb. 13 – will likely do nothing but twist the knife in investors’ hearts.

Don’t say you weren’t warned.