Canopy Boosts Sales and Outlines U.S. ApproachNovember 10, 2020
Smiths Falls, Ontario-based Canopy Growth’s fortunes continued to improve in its quarter ended September 30. The company set a new record with C$135 million ($103.8m) in net revenue, up from C$110 million ($84.6m) sequentially. Losses narrowed as well, dropping to a C$97 million ($74.6m) net loss, an improvement of C$31 million ($23.8m) quarter over quarter. CFO Mike Lee, a Constellation Brands veteran, said the company has identified cost saving opportunities in the range of C$150-C$200 million moving forward.
Canopy CEO David Klein updated analysts on developments in the U.S. “The results of the ballot initiatives clearly showcase that support for adult-use marijuana legalization extends across geographic and party lines and is supported by a majority of Americans,” he said. “In 2021 we expect to see a lot of positive activity at the state level. We’re excited by the prospect of participating in the U.S. THC market and we’ve already developed a U.S. ecosystem that positions us well.”
Canopy’s goal, Klein said, is to become a “cannabis-focused CPG company.” THC brands that the company has developed in Canada, like Tweed and Houseplant, will enter the U.S. through CBD line extensions along with dedicated CBD brands like BioSteel and hardware brand Storz & Bickel. “We plan to extend these brands into THC as regulations evolve,” Klein added. “We will layer in additional brands over time, which will create further scale with our existing distribution networks and further build our relationships with retailers.”
BioSteel, a CBD sports drink, recently signed distribution agreements in the U.S. with Reyes Beer Division and Manhattan Beer, among other partnerships made through Constellation’s distribution network, and expects to secure prominent placement on shelves throughout 2021. Meanwhile, Canopy has launched a new Quatreau sparkling water brand in Canada, including one version with only CBD and one that also includes a limited amount of THC.
Still, the vast majority of Canopy’s cannabis sales continue to come from flower, at least for now. In the most recent quarter, flower accounted for C$63.9 million ($49.1m) worth of sales, with beverages and other newer form factors generating C$8 million ($6.2m).—Danny SullivanSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.
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