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Before Canada legalized marijuana in 2018, Canopy Growth (NASDAQ: CGC) was seen as a top cannabis stock, an industry leader, and arguably one of the best stocks to invest in for people who were bullish on the prospects for marijuana reform at the time.

Fast-forward to today, and I would hesitate to classify the stock as a leading company or a top growth stock to own. There are larger cannabis companies than Canopy Growth out there, and it hasn't been much of a growth business of late -- it has been slashing costs and pivoting to an "asset-light" model in order to conserve cash.

But Canopy remains hopeful about the U.S. legalizing cannabis because if that happens, it will open up a new growth opportunity for the business. And that raises the question -- is it really too late to invest in the pot stock, or could now be the right time to finally buy shares of Canopy Growth?

Why the stock could still generate some great returns

The advantage Canopy Growth has over many pot stocks is its name has become iconic and incredibly recognizable in the industry. If you think about pot stocks, odds are, Canopy Growth and its main rival, Tilray Brands, will be among the two big names that come to mind. And that's evident because anytime there is talk of the U.S. potentially moving on marijuana reform or there being excitement around that topic, shares of these stocks surge in value.

Take, for instance, news that the U.S. is reportedly considering rescheduling cannabis to a less dangerous substance. That would make it easier to research cannabis, and it could lower the tax bill for U.S.-based cannabis companies. It wouldn't result in legalization, however. But despite this, two stocks that shot up the day the news came out were Canadian cannabis producers Canopy Growth and Tilray Brands. The former saw its share price soar by a whopping 79% the day the news came out, while the latter jumped by 40%.

When there's positive news in the industry, these are often the go-to stocks for investors to pile money into, even when it may not necessarily benefit them directly in any way. These stocks have effectively become a way for investors to bet on marijuana legalization in the U.S. And so it follows that if you expect legalization to happen soon, these stocks could have the potential to generate some exceptional returns, at least in the short term, anyway.

If you were to base your investing decision on the company's actual performance, however, you'd likely come to a different conclusion.

Canopy Growth's fundamentals remain underwhelming

Canopy Growth has been trimming its business to become leaner, and in a better position to potentially enter the U.S. cannabis market once it's able to do so. But that doesn't mean the business is on solid footing right now.

In its most recent fiscal year, which ended on March 31, Canopy Growth posted a loss totaling 675.8 million Canadian dollars -- more than its net revenue of CA$297.1 million. With high operating expenses totaling CA$309.6 million and which are more than 100% of revenue, Canopy Growth still has a long way to go in proving that its operations are sustainable, and that it is indeed in a good position to take advantage of new growth opportunities.

During the last three months of the fiscal year, it did generate positive year-over-year growth of around 7% with its top line rising to CA$72.8 million. But historically, the company has struggled to generate meaningful and consistent growth.

CGC Revenue (Quarterly YoY Growth) data by YCharts

Should you invest in Canopy Growth stock today?

Canopy Growth isn't a safe stock to buy. In five years, its value has collapsed 98%. And while the stock can rally on cannabis-related news, investors can't rely on that to keep the stock up for long, as is evident with its abysmal long-run returns.

The company's best days could well be behind it, which is why I believe it's too late to invest in the stock. Even if legalization takes place in the U.S., other, stronger companies from other industries (e.g., pharma, tobacco, beer) could enter and, through mergers and acquisitions, give Canopy Growth some intense competition. That's why even legalization in the U.S. cannabis market may not be enough to bolster this struggling stock.

Should you invest $1,000 in Canopy Growth right now?

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.