As investors began kicking the tires of a few leading cannabis stocks last week with the hopes of perhaps getting a bargain, one notable stock on the lot drew no attention. No one was even interested in a test drive despite its once head-turning reputation.

That stock was Canopy Growth (NASDAQ:CGC).

After taking a punishing hit at the end of June, in the wake of company officials announcing a debt-swap deal, Canopy shares continued to drop last week.

Source: Investing.com

Canopy Growth closed last Friday at US$2.62, down another 3.3% on the day. The decline continued Monday, as the stock closed at US$2.31, down another hard-to-ignore 11.8%.

The recent debt-swap announcement centered around a plan to exchange $255.4 million in debt for shares and $3 million in cash for accrued and unpaid interest. One of the results of the move will see the cannabis grower’s main shareholder, US-based Constellation Brands (NYSE:STZ), increase its stake in the company. It will now account for about 40%, up from about 36%.

But another result has left all other shareholders shouldering the cost, as shares were diluted by an estimated 20%, according to Canaccord Genuity analyst Matt Bottomley in an interview with BNN Bloomberg.

Bottomley cut his price target for Canopy to C$3.50 from C$4.50.

Other analysts followed, slashing their price targets on the stock by nearly half.

Also last week, Fitch Ratings downgraded its rating of Canopy.

In sharp contrast to the demise at Canopy Growth was the uptick in stock price at other leading cannabis companies.

Topping that list were US multi-state operators Green Thumb Industries (OTC:GTBIF) and Canadian-based Tilray (NASDAQ:TLRY).

Chicago-based Green Thumb led the pack, gaining about 16% last week, while Tilray, which trades exclusively on the NASDAQ, gained about 10%. Florida-based Trulieve Cannabis (OTC:TCNNF) was up about 3.5%.

Source: Investing.com

These increases could be attributed to the hope of incremental movements expected by US lawmakers pushing forward legislation that would change the federal landscape with respect to the legalization of marijuana before the November mid-term elections. But at this point, that is all speculation. There is no guaranteed movement.

Green Thumb retraced some of its advancement yesterday, closing down almost 3.5%, while Tilray slumped yesterday, shedding almost 8%. It all goes to show just how soft the cannabis sector continues to be at the moment, and just how dependent companies have become on US legislation to expand access to bigger markets.

Disclosure: The writer doesn’t own shares of the stocks mentioned.