Canopy Growth (CGC 0.42%) is a shadow of the stock it was a year ago when the cannabis producer was full of high hopes and expectations for the future sitting atop an exciting new industry with nothing but growth ahead of it. The Canadian-based company was considered the industry leader, but today it's a much different story, one full of question marks and uncertainty. It would have seemed crazy to think that after legalization happened in Canada, when there would be even more opportunities, the stock would see its price get cut in half. And yet, that's exactly what has happened. 

Trading at under $20 a share as of Thursday's close, Canopy Growth stock has fallen significantly from the 52-week high of $52.60 that it reached in late April. The big question for investors is whether more of a free fall could take place or if now could be the time to swoop in and buy the stock for a bargain price. Let's take a closer look at where the company is today to determine which is the better approach to take.

The company is still undergoing a change in management

One of the biggest question marks surrounding the company is who will be leading it. With former CEO Bruce Linton out of the picture and the current CEO Mark Zekulin ready to leave once a successor is named, it's hard to assess a company without a leader in place. And that could lead to significant changes in strategy. One thing we can surmise is that the company's future path will likely be different than Linton's very aggressive growth strategy, which made profits elusive for the company, something that investors grew tired of and which was likely a factor in his forced departure.

Cannabis plant

Image Source: Getty Images.

While a more buttoned-down approach might help tighten up the company's financials, it may come at the price of greater conservatism and fewer opportunities being pursued. However, that doesn't mean that it won't be busy with acquisitions. In early October, Canopy Growth announced that it had purchased a 72% stake in sports nutrition company Biosteel for an undisclosed amount of money.  

At a minimum, it's clear that profitability will be more of a priority for Canopy Growth rather than an all-out growth strategy. Once the company finds a new CEO, which is expected to be before the end of this year, there will likely be big changes for the company moving forward. 

The beverage market may not provide enough of a growth opportunity 

While Canopy Growth will have beverage products ready for the launch of cannabis 2.0 recreational market in Canada, the reality is that the new segment will probably not be enough to give the company much of a boost. While cannabis-infused beverages are expected to account for as much as 30% of the industry's sales in Canada, the pie isn't all that big. Research company BDS Analytics already trimmed its forecast for the Canadian industry to just $5.2 billion, and that's five years from now.

And with competition from HEXO and other companies that will have CBD-infused drinks ready to go, it's not going to be easy for Canopy Growth by any means. While there will be other derivative products that can help drive sales higher for Canopy Growth, given the size of the market, it's going to be hard to justify the company's $7.5 billion valuation even if sales continue to rise.

Has Canopy Growth fallen enough to be a good buy?

Gauging how much marijuana stocks are worth is a difficult task since many have been overvalued for a long time. Conventional valuation multiples have proven to be irrelevant, as investors have continued to place enormous values on stocks that make no money and that bleed lots of cash. Even today, with Canopy Growth's stock trading north of 30 times its sales, that still looks like an obscene multiple. However, it's unlikely that it will trade at less than 10 times sales, which would be a much more reasonable valuation, anytime soon.

The short answer as to whether Canopy Growth is a buy is "no" at this point. Even though the stock has fallen around 60% over the past six months, with the amount of competition it's facing and the uncertainty in the industry surrounding not just the company but the industry as a whole, it's hard to point to a certain number or a key development and say that it will help pull the stock out of this free fall.

Over the longer term, there might even be more ambiguity for Canopy Growth, especially if the U.S. moves to legalize pot, in which case, the industry could get even more competitive.