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The investment, which represented a 38% stake in Canopy, was seen as the right move at the right time. That money was supposed to enable Canopy to seize and hang onto a permanent leadership position in the cannabis sector. More than that, Constellation's investment in Canopy was seen as mainstream recognition that, yes, cannabis is a force to be reckoned with in the market.

That much is still true today, but let's look at what happened with that $4 billion investment...

Canopy Made Misstep After Blunder After Mistake

You could point to its acquisition spree, much of which didn't make sense even at the time - Beckley, Ace Valley, and the like. The buyout binge slashed Canopy's cash position by almost half, and even once the CEO was replaced, the acquisitions continued apace.

Canopy was supposed to launch a market-crushing, all-new line of "Cannabis 2.0" cannabis-infused beverages. These would've been the very first mainstream "cannabeverages" in the market, and they were expected to launch... in January 2020. The company soon put on the brakes, saying it wasn't ready to launch, that it didn't have production facilities ready. Meanwhile, at least two other cannabis companies have teamed with gigantic beverage distributors to market their cannabis drinks. Canopy blew a commanding lead in that segment, and it may never recover; don't stick around to wait for it.

Worst of all, Canopy has consistently misread the market, specifically the demand for its products. In other words, it's blitzed the retail markets with products consumers don't want and, therefore, don't buy. Notoriously, in late 2019, it announced a $32.7 million hit on its softgel and oil products, which has led to seven- and eight-figure "restructuring charges" in some quarters.

Its "Godfather of Cannabis" CEO was fired amid a string of disappointing quarters, but that wasn't enough to get back on track.

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Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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