Canopy Growth Not Growing – Cannabis News, Lifestyle

Canopy Growth isn’t growing. The Canadian cannabis company reported a loss of C$578 million for the fourth quarter, culminating in a loss of C$4.1 billion since 2015. Compared to the previous quarter, revenue collapsed. Net sales fell 21% to CA$111.8 million.

Overall, Canada’s recreational cannabis sales are down 19%, or C$39 million.

Compared to the previous quarter

Compared to the previous quarter, Canopy Growth isn’t growing. The company has declined in sales of flowers and oils. But drinks, edibles, and vapes remain unchanged. Canopy reported a 25% decline in revenue in the fourth quarter compared to the prior-year period.

Some critics accuse the board of being overwhelmed. For example, Canopy CEO David Klein recommended one of their cannabis beverages for the Memorial Day long weekend during an earnings conference. Of course, you can’t buy Canopy’s cannabis beverages in the United States. And Canada does not celebrate Memorial Day. Canada celebrated Victoria Day or “May Two-Four” this past weekend.

Another prime example of why legalizing Trudeau should have opened up the market for BC Bud instead of corporate suits. Not only do BC Bud farmers know how to grow high-quality cannabis for profit, many of them are Canadian.

Despite Canopy’s woes, Klein remains the best-paid CEO in Canada at $45 million. With a salary in excess of $280,000, much of his compensation comes from stock options.

Canopy Growth Non-Growing Stocks

Canopy shares have fallen

Given Klein’s stock option compensation, Canopy’s recent gains should sound alarmist. Canopy closed at $4.88 per share on the NASDAQ ahead of Memorial Day weekend. That’s a decrease of 12%.

Canopy Growth isn’t growing north of the border either. On the TSX, they closed at CAD$6.18 on Friday. And then they lost another percentage when the TSX opened on Monday.

Canopy Growth saw its revenue decline 35% year over year. Net income wasn’t impressive either, posting a loss of CA$111.8 million (US$87.6 million).

Investors have hit the sell button as this is far below analysts’ expectations.

CEO wants to remain “asset light”.

A common criticism of Canada’s LPs has been that they don’t sell cannabis, they sell stocks. Since taking on the CEO role, Klein has favored an asset-light approach.

That’s at least the reason for Canopy’s desire to acquire a 75% stake in California cannabis company Jetty Extracts. The deal won’t go through until the US legalizes cannabis at the federal level.

As Klein told shareholders, “I firmly believe in the strength and competitive position in the US THC ecosystem that we are building. Canopy’s unique model is poised for rapid growth and an emphasis on prioritized markets with fast-growing categories, strong brands, and a balanced operational footprint.”

Klein defended that Canopy Growth didn’t grow this latest quarter. He said Canopy didn’t include Wana Brands’ sales in the company’s financial statements. Wana is the number one edibles brand in North America, but like Jetty Extracts, its relationship with Canopy is ongoing.