Shares of Canopy Growth (NASDAQ: CGC) plunged 35% this week, according to data provided by S&P Global Market Intelligence, after shareholders saw the structure of a pending 1-for-10 "share consolidation" announced by the cannabis producer.

The bulk of Canopy Growth's drop came on Wednesday, after the company announced it will implement a share consolidation -- typically known as a reverse stock split -- at a 1-for-10 ratio, effective prior to the market's opening bell on Dec. 20. This will essentially reduce the number of outstanding common shares by a factor of 10 while increasing the per-share price of Canopy's new common shares by the same multiple.

Shares of Canopy Growth were already down more than 70% year to date leading up to the announcement, and closed Friday at $0.52 per share. And by the rules of the , the exchange on which it trades, a stock that closes below $1 per share for 30 consecutive days risks being delisted. But even after a stock falls out of compliance with that rule, it can get back into compliance -- and avoid being delisted -- by closing at or above $1 per share for 10 consecutive business days. The reverse stock split will let it accomplish that, and put Canopy Growth back into the good graces of the Nasdaq.

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Source Fool.com