Key Points
Canopy Growth's revenue is rising, but it's carrying a sizable debt load.
Green Thumb Industries is one of the few profitable cannabis companies.
Green Thumb Industries has expanded, but cautiously.
Investors in Canopy Growth (NASDAQ: CGC) have watched the value of their shares go up in smoke over the past year, as the stock fell by more than 40%. Around nine years ago, the Canadian cannabis retailer and grower had a market cap of about $1.5 billion, making it the largest company in its segment. At its peaks, in 2019 and 2021, it was worth more than $15 billion. Today, its market cap has tumbled to just under $400 million, and it hasn't had a profitable quarter since Q2 2021.
By contrast, if you're looking to invest in a plant-touching cannabis company that's actually profitable and better prepared for the long-term growth the industry is expecting, there is a solid option. Chicago-based Green Thumb Industries(OTC: GTBIF) is on track for its sixth straight year of positive earnings per share (EPS). Let's compare the cases for Canopy Growth versus Green Thumb Industries.
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Why you should consider holding onto Canopy Growth
The best argument for buying shares of Canopy Growth is that it seems to be improving its bottom-line performance. And with the stock trading at just over $1 a share, it may be worth taking a flier on the company.
In its fiscal 2026 third quarter, which ended Dec. 31, it reported revenue of $90.4 billion, up 5% year over year. It also trimmed its net loss by 49%, resulting in a loss of $0.18 per share.
The company also narrowed its net long-term debt by 25% to $225 million. To do that, however, it has issued a lot of new stock, diluting the value of the stock for its prior shareholders. Over the past year alone, the number of shares outstanding has increased by 142%. Canopy has operations in Canada, Germany, and Australia. Canopy USA's 2024 purchase of Acreage Holdings gives it a toehold in the growing U.S. cannabis market.
Why you should buy Green Thumb Industries instead
Green Thumb Industries is one of the larger multi-state operators (MSOs) in the U.S. cannabis sector. As of the end of the third quarter, it had 108 dispensaries and 20 manufacturing facilities across 14 states. If cannabis is reclassified as a Schedule III substance, as appears likely to happen sometime in the next two years, the company will become even more profitable based on tax-related reasons alone.
As it stands now, with marijuana considered a Schedule I drug (the same classification as heroin), cannabis companies cannot take standard business deductions. If and when that changes, MSOs in the U.S. will benefit. One survey by Whitney Economics found that U.S. cannabis companies paid an additional $2.3 billion in taxes in 2024 because the drug was still a Schedule I drug. Rescheduling will give healthy companies such as Green Thumb the ability to invest more in growth.
In Q3, Green Thumb reported revenue of $292 million, up 1.6% year over year, and EPS of $0.10, compared to a loss of $0.01 per share in Q3 2024. While Canopy Growth is selling large quantities of new shares, Green Thumb aimed to bolster its stock price by authorizing a $50 million stock buyback.
One other advantage that Green Thumb could gain from rescheduling is that it could eventually lead to additional legal reforms that would allow it to be listed on a U.S. exchange such as the Nasdaq or New York Stock Exchange, instead of trading as an over-the-counter stock, as it does now. That means that it would be easier for investors to buy the stock, and that it would more likely be included in exchange-traded funds. Both conditions would add support to the stock's price. (Canopy, because it is a Canadian company that doesn't sell cannabis in the U.S., is not subject to that listing restriction.)
Green Thumb is also in a better position to expand because it has a debt-to-equity level of 0.28, compared to 0.44 for Canopy Growth. Green Thumb's leaner balance sheet will give it more flexibility to withstand any macroeconomic headwinds that may arise.
Should you buy stock in Green Thumb Industries right now?
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James Halley has no position in any of the stocks mentioned. The Motley Fool recommends Green Thumb Industries. The Motley Fool has a disclosure policy.
