Sadly for Canopy Growth, the Fed Is on a Different Kind of High

CGC stock - Sadly for Canopy Growth, the Fed Is on a Different Kind of High

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It has been a disappointing day, week, month and year so far for Canopy Growth (NASDAQ:CGC). No matter where you point your mouse on the charts recently, CGC stock seems to return a flush of red ink. Judging by its technical pattern, it is possible that the descent has slowed for the cannabis specialist. Nevertheless, that doesn’t mean stakeholders should expect a rousing comeback in the near term.

If anything, the narrative over the next few months have turned rather bleak. InvestorPlace’s Louis Navellier rates CGC stock as an “F,” which is quite a condemnation. Since Navelllier has a long track record of turning big, calculated risks into lifechanging returns, if an optimist like him doesn’t see the potential in Canopy, it is at least a warning to conduct further research.

Beyond that point, though, I completely agree with Navellier that the legislation buzz is fading for CGC stock. As he pointed out, in late March, “the U.S. House of Representatives moved ahead with its pot legalization bill, known as the MORE Act.”

Though a significant development, there is only a “slim chance this bill will make it through the U.S. Senate and to President Joe Biden, who would sign it into law.” Enough lawmakers oppose marijuana legalization at the federal level, making such bills a charade, similar to typing loudly and busily on your keyboard when the boss walks by.

But the other problem with CGC stock and the cannabis industry is inflation. Unless the Federal Reserve wants to take drastic action against surging prices, the cost of doing business the right way may become prohibitive for botanical retailers. In turn, it is likely that cannabis users will turn to the black market for their needs.

And honestly, why wouldn’t they? Law enforcement officers have much bigger problems than chasing after folks indulging in an activity that an overwhelming majority of Americans believe should be legalized. Until this economic narrative changes, CGC stock may face continued volatility.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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