It has been more than three years since Canada legalized recreational marijuana on Oct. 17, 2018. The road has been a bumpy one for the industry as supply issues and rising competition have made it challenging for cannabis companies in the country to grow their sales or post a profit.

The industry leader three years ago was cannabis producer Canopy Growth (NASDAQ:CGC), but it's clear it isn't in that place right now as rival Tilray generates more in revenue. A lot has changed since legalization took place, and if you were to bet that legalization would have been the opportune time to invest in Canopy Growth, you would be sorely disappointed.

Two scientists working in a greenhouse.

Image source: Getty Images.

You would have incurred a loss of nearly 80%

On Oct. 17, 2018, shares of Canopy Growth closed at $50.69. That's a far cry from the $11 that it trades at today. That means if you invested $100,000 into the company at the time, your investment would be worth less than $22,000. That's a 78% decline in share price in a little over three years. During the same time frame, the S&P 500 has risen by more than 66%.

If you timed it just right and sold the stock during the excitement of early 2021 when meme stocks and risky investments were soaring, you could have broken even and even made a small profit. But by and large, the pot stock has been an awful investment in recent years.

Why all the bearishness?

A big reason investors have soured on the stock is that the company has failed to make significant improvements toward profitability despite growing its revenue. In fiscal 2021, the company's net loss of 1.7 billion Canadian dollars for the period ending March 31 was more than three times the revenue it reported (CA$547 million). A year earlier, its loss totaled CA$1.4 billion on revenue of CA$399 million. 

Even on an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) basis, it still incurred a loss of CA$162.6 million in its most recent results for the quarter ending Sept. 30 (that's almost double the CA$85.7 million loss it reported a year ago). And its top line isn't doing all that great either, with sales of CA$131.4 million last quarter declining by 3% year over year.

Without much positive news surrounding the company, Canopy Growth has been an easy stock for investors to be bearish on over the years.

Is it still a bad buy?

Although Canopy Growth's stock has fallen hard over the years, it still isn't a bargain given its sales:

CGC PS Ratio Chart

CGC PS Ratio data by YCharts

The pot stock was trading at a ridiculously high premium in the past and its descent over the past few years has simply brought it down to be more in line with its peers. If you are looking at Canopy Growth strictly in terms of its valuation and near future, then it definitely isn't a buy as it could continue to go lower.

But the company is a more optimistic investment opportunity when you look at the long term and are willing to hang on to it for several years. With multiple pending U.S. acquisitions that it could execute on when legalization takes places in the U.S., it's in a great position to benefit from growth in that market -- once it opens up. Unfortunately, there's no timetable on what that might happen, nor a crystal ball to see what the industry looks like when legalization in the U.S. finally takes place. 

There are better buys in the cannabis sector than Canopy Growth out there; this is a stock that's only suitable for investors with a great deal of patience and a high risk tolerance.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.