Canopy Positions For U.S. Growth As It Battles Challenges In Canada
February 15, 2022Canopy Growth continues to position itself for a rapid rollout of THC products in the U.S. once cannabis is legalized at the federal level. In the meantime, the company is aggressively targeting the U.S. CBD market while combating difficult conditions in Canada’s cannabis sector.
“We established a cross-functional team of senior leaders across Canopy and Constellation Brands to oversee the advancement of our U.S. THC portfolio,” said CEO David Klein. “Canopy has clearly established paths into the U.S. THC market with the acquisitions of Acreage and Wana, as well as our conditional ownership stake in TerrAscend, all upon federal permissibility of U.S. THC. I want to be clear, there is strategic intent behind the U.S. ecosystem that we’re creating. We’re not just a Canadian LP. We’re not building an MSO, and we aren’t building an alcohol company. We’re developing a robust U.S. THC ecosystem that’s focused on acquiring beloved premium brands like Storz & Bickel and Wana, and backing them with unmatched innovation and operational capabilities while leveraging unparalleled distribution to rapidly scale across North America.”
As it awaits federal legalization of THC, Canopy launched Whisl brand CBD-only vapes in Circle K locations in its fiscal third quarter ended in December, which were the No.-1 CBD-only vape in the food, drug, mass, and convenience channels for the 13 weeks ended December 26, according to IRI data. CBD drink Quatreau also continued to grow its footprint, increasing its brick-and-mortar retail presence by 225% during the quarter, while Martha Stewart CBD products’ door count rose by 21%.
Among Canopy’s other interests, the standout was sports drink BioSteel, which more than doubled its net revenue to reach C$17 million ($13m) in the quarter. BioSteel has signed numerous sponsorship deals over the last year, including partnerships with NBA teams including the Lakers, Mavericks, Raptors, and Nets. Vape hardware manufacturer Storz & Bickel’s revenue grew 5% to C$25 million ($20m) as well.
Overall, Canopy’s revenue grew 7% sequentially to C$141 million ($111m) in the three months through December, but sales were down 8% compared with the prior year, while adjusted EBITDA showed a loss of C$67 million ($53m), a slight improvement from a year earlier. The sales erosion was most pronounced in the Canadian recreational cannabis segment, which slipped 25% to C$47.8 million ($38m) year-on-year.
“Our flower sales continued to be impacted by ongoing price compression in the value-priced flower category as well as the limited supply of single-strain high-potency flower products,” said interim CFO Judy Hong on an earnings call. “Now the good news is we’re starting to see new single-strain flower products hitting the market with strong reception, and we expect additional supply to come into market in the coming months.”—Danny Sullivan
Subscribe 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.Tagged : Acreage, cannabis, Canopy Growth, TerrAscend, US legalization, Wana, Whisl
