Canopy Growth Corp. (NYSE: CGC; TSX: WEED) is a Canada-based holding company that produces, distributes, and sells a variety of cannabis and hemp-based products for medical and recreational use. Its products include dried flower, hemp, vape pens and cartridges, THC- and CBD-infused beverages, and edibles.

Founded in 2013, Canopy Growth faces competition from a large number of U.S. and primarily Canada-based cannabis companies, including Cronos Group Inc. (NASDAQ: CRON; TSX: CRON.TO), Aurora Cannabis Inc. (NYSE: ACB; TSX: ACB.TO), and OrganiGram Holdings Inc. (NASDAQ: OGI; TSX: OGI.TO).

Key Takeaways

  • Canopy Growth produces, distributes, and sells medical and recreational cannabis.
  • Recreational-use cannabis sales are its biggest revenue source.
  • The company is investing heavily in international sales, where medicinal marijuana is one of its fastest growing areas.
  • David Klein succeeded Mark Zekulin as CEO in January 2020 in the third chief executive change in less than a year at the company.

Canopy Growth’s Financials

Canopy Growth prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial data presented below is in Canadian dollars in accordance with the company's financial statements.

Canopy Growth management has focused on a strategy of absorbing financial losses short term in order to dramatically expand its operations and sales in the emerging recreational and medical cannabis markets in the U.S, Canada and globally. The company posted a net loss of $670.1 million on net revenue of $226.3 million for fiscal year (FY) 2019, which ended March 31, 2019. Revenue grew 190.4%, primarily driven by sales of recreational-use cannabis, which was legalized in Canada in October 2018.

Volatility in demand in the cannabis market has aggravated Canopy Growth's losses. The FY 2019 net loss was more than 12 times greater than the loss reported in FY 2018. Operating expenses, which account for the largest share of costs, rose nearly 350%.

The rapid revenue growth and mounting losses have continued. Revenue surged 119.9% in the first nine months of FY 2020 while its net loss was about five times higher than for the same period a year earlier. The losses also have damaged the value of Constellation Brands' $4 billion investment in Canopy growth in 2018.

Canopy Growth’s Revenue Sources

Canopy Growth provides a breakdown of its gross revenue, before excise taxes, into these five sources: Recreational: Business to Business; Recreational: Business to Consumer; Medical: Canadian; Medical: International; and Other. The recreational sources of revenue were new in FY 2019, when cannabis was first legalized in Canada.

Recreational: Business to Business

Canopy Growth's business-to-business wholesale model was developed in response to the legalization of recreational cannabis in Canada, as the existing medical cannabis market was largely based on a business-to-consumer model. The business-to-business wholesale model sells large quantities of cannabis to provincial and territorial agencies, which then distribute the product to physical and online retail stores.

Revenue for FY 2019 was $117.4 million versus zero in FY 2018, comprising Canopy Growth's largest source of revenue at more than 46% of total gross revenue. Revenue for Q3 FY 2020 fell 11.1% compared to the same three-month period in FY 2019 during the transition to the opening of the recreational cannabis market. 

Recreational: Business to Consumer

Canopy Growth's business-to-consumer model began with online medical sales directly to consumers. Following legalization, the company introduced physical retail stores, wherever permissible, for the recreational market, including for the Tweed and Tokyo Smoke brands.  Revenue for FY 2019 was $23.1 million versus zero in FY 2018, comprising about 9% of gross revenue. Revenue for Q3 FY 2020 rose 32.8% year over year.

Medical: Canadian

Canopy Growth's medical division is operated by its Spectrum Therapeutics brand, which serves more than 76,000 Canadian customers. It produces and distributes a wide variety of cannabis products aimed at helping customers with pain, mood, and sleep conditions.  Canadian medical revenue fell 2.6% during FY 2019 to $68.8 million, comprising about 27% of gross revenue, and also declined 26.6% YOY throughout the first three quarters of FY 2020.  

Medical: International

The Spectrum Therapeutics brand sells products in 15 countries besides Canada. International medical revenue grew 170.4% during FY 2019 to $10.1 million, comprising nearly 4% of total gross revenue. Revenue grew 470.1% YOY during the first three quarters of FY 2020. The increase was largely due to revenue generated by C3 Cannabinoid Compound Company, which Canopy Growth acquired in 2019.


Canopy Growth's "Other" sources of revenue include: sales of vaporizer devices through its Storz & Bickel brand, This Works brand, BioSteel brand, and revenue from extraction services and clinic partners.  Other revenue grew 846.1% during FY 2019 to $34.0 million, comprising more than 13% of the company's total revenue, and rose 670.3% throughout the first three quarters of FY 2020. 

Canopy Growth's Recent Developments

Canopy Growth announced in December 2019 the appointment of David Klein as the company Chief Executive Officer (CEO), effective January 14, 2020, succeeding interim CEO Mark Zekulin who stepped down from his role as CEO and resigned as a director of the company's Board of Directors.