Constellation-backed Canopy Growth loses C$1.2bn in three months
Canopy Growth, the Canada-based, Constellation-backed cannabis company, reported a quarterly net loss of C$1.28 billion this week, causing the value of its shares to fall by 10%.
As reported by MarketWatch, the world’s largest cannabis company by market value put the loss down to the elimination of C$1.18 billion in warrants related to Constellation’s investment.
This time last year, Canopy Growth reported losses of C$91 million, or 40 cents a share, while loses this quarter rose to C$3.70 a share.
Last month the company fired its founder and co-CEO, Bruce Linton, a week after Constellation expressed disappointment over its financial losses, leaving Mark Zekulin in charge, who is expected to step down once a new CEO is found.
Linton’s strategy of pursuing growth at the expense of short-term profits have fallen out of favour with Constellation, which is under pressure to provide a clearer timeline for a return on its investment in Canopy.
“The company remains focused on laying the foundation for dominance in an emerging global opportunity.
“This means investments in developing intellectual property, building brands, building international reach, and ensuring scaled production capability for current and future products,” Zekulin said in a statement.
“We are fixated on the process of evolving from builders to operators, meaning that as our expansion programme comes to a close in Canada, and as new value-added products come to market in Canada, we demonstrate a sustainable, high margin, profitable Canadian business,” he added.
Having invested US$4 billion in the company, drinks giant Constellation Brands owns a stake of nearly 56% in Canopy Growth and has four of its six board seats. Constellation’s backing of Canopy is the largest investment in the cannabis industry to date.
Canopy Growth sold over 10 metric tons of cannabis in the fiscal first quarter, up 13% sequentially, and increased its harvest by 183% to 41 metric tons for the quarter. Linton founded Canopy Growth in 2013 in an abandoned chocolate factory in Smiths Falls. He took it public in 2014.