Hi, I'm embarresed to say this, but I was wrong. The canopy does fold back. When my wife and I tried it didn't go back, even if we pulled hard. We were worried we would break it and the manual didn't say anything about the canopy folding back, except on the page discussing putting the carrier in. We figured our model didn't fold back.
But my wife was at the mall yesterday and saw the same model and the canopy pulled back. I tried again and it still wouldn't pull back, I yanked it hard and it made popping sound and I worried I'd broken it. But now it works just fine. Either the joint on mine was really stiff out of the factory, or you are supposed to really yank it the first time you pull it back.
I would increase my rating now that I know the canopy does retract. Please disregard my first post.