A canopy can be as simple as a plain box, or as fancy as you can make it.
Wood to use:
Solid hardwood is the best, but will be pricey & you will need a fair amount of woodworking skills to get good results. <Or you pay $$$ for pre-dressed hardwood.>
Solid pine would be a good material for beginners. Available in many different dimensions & reasonable, it is also easy to work with. Avoid glued jointed panels/pieces. The glue is not water proof, & might separate unless you seal perfectly.
Stud grade spruce is reasonable, but you will have to spend time going through the stack to find straight/unblemished pieces or own a jointer/planer to dress the wood. <I usu. get 2x6's & then cut/plane them down to size ... for a canopy, I made the frame with ~1" thick stock.>
Exterior grade plywood or furniture grade plywood can be used, but be sure to seal all edges & faces or it will de-laminate.
Avoid particle boards/chipwood/hardboard, etc ... they will absorb water & swell & breakdown. Also avoid any pressure treated wood products, <Arsenic & cyanide in chemicals ... kill fish!>
Whatever you use, make sure you seal the finished canopy well. I use 3 coats of exterior poly. Marine spar finish is another option. <Better, esp. if you have SW
You may also consider plastic/acrylic panels for "skin". I used 1/4" acrylic panels for my lids, looks good & I can also see my fish from the top.
Make your canopy so that the inside dimensions are bigger than your tank's OUTSIDE dimensions. Then have cleats inside the canopy so it will rest nicely on top of the tank. I make the canopy about 1/4" bigger all around so there is easy fit & no worry of pinching with wood movement, etc. With a lipped canopy like this, it cannot shift & fall off the tank, plus the lip covers the plastic trim of the tank. <My canopy looks better than the plastic!>
The height of the canopy depends on the lights you have inside. Make it taller than the lights so that there is a couple of inches (at least) between the light bulbs & the water surface. If you use MH
or other hot lights, you will need to allow room above the lights for air movement & room for fans & cooling equipment. <Hot lights mounted directly on wood surface = fire hazard!>