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Canopy Growth: An Overview of the Cannabis Giant

Canopy Growth (CGC) (WEED) is a major cannabis producer and supplier. The company strives to be the global leader in the cannabis industry. It is also the pioneer in the pricing of medical cannabis products.

Currently, Canopy Growth has its operations in 14 countries on five continents. The company expanded through strategic partnerships, acquisitions, license agreements, and supply agreements. Plus, it has 27 retail stores and has acquired licenses to open more retail stores. Canopy Growth has 5.2 million square feet of licensed space for production in Canada.

Initial development

Bruce Linton and Chuck Rifici founded Canopy Growth in 2013. Headquartered in Smith Falls, Canada, the company was originally named Tweed Marijuana.

In 2014, the company went public through the Toronto Stock Exchange and became North America’s first legalized cannabis producer to be traded on an exchange. In September 2018, the company became the first cannabis producer to trade on the NYSE. The company’s stock trades as WEED on the Toronto Stock Exchange and as CGC on the New York Stock Exchange.

Neither of the initial founders is part of the company’s current management team. Rifici stepped down as CEO in 2014 and sold the last of his shares in May 2017. Plus, Linton was ousted by the board in July 2019. Currently, the company’s top management is led by CEO Mark Zekulin, CFO Mike Lee, and company president Rade Kovacevic.

Canopy Growth’s products

Canopy Growth’s cannabis products include softgels, oils, flowers, and milled. The types of plants used for these products are Sativa, Indica, and hybrids of both. Canopy Growth produces products with different ratios of CBD (cannabidiol) and THC (tetrahydrocannabinol). Most of the company’s revenue comes from dry buds. The company’s products include Penelope oil, Penelope flower, Argyle soft gels, Donegal flower, and foria oil.

These products are color-coded to help customers select products. THC-dominant products are color-coded in red, orange, and purple. Balanced-ratio products are color-coded in blue and green. Plus, CBD-dominant products are coded in yellow.

Brands

Canopy Growth expands through partnerships and acquisitions, which yield a wide range of products for its varied customer base. The company developed a brand portfolio to cater to different sections of the market.

  • Canopy Growth’s core brands include Tweed, Spectrum Therapeutics, Tokyo Smoke, Van Der Pop, DOJA, Twd, and ThisWorks 24hr Skin Solutions.
  • The company’s affiliated brands include LBS, DNA, Green House Seed Company, and Houseplant.
  • Its owned tech brand is Storz and Bickel.
  • Its retail platforms are Tweed and Tokyo Smoke.

Major partnerships

Canopy Growth launched its Craftgrow collections by partnering with a variety of producers and curating from other manufacturers. Its online market space provides a broad range of options for its customers.

The company started this initiative with Tweed, Bedrocan Canada, and Mettrum Health. Canopy expanded its Craftgrow family by adding PUF Ventures, PheinMed, Valens Growork, Delta 9 Cannabis, Sunniva, and AB Laboratories.

In November 2017, Green House Holdings North America, National Concessions Group, and Canopy Growth combined for a joint venture called Agripharm. Agripharm focuses on developing new products for the Canadian market. Also, Canopy Growth reserves the right to purchase 75% of Agripharm’s productions.

Canopy Growth partnered with PharmHouse to increase Canopy Growth’s cultivation space in the PharmHouse facility in Leamington, Ontario. Overall, PharmHouse has committed 30% of its flowering space over three years.

Canopy Rivers works with Canopy Growth to identify potential complementary partners for strategic partnerships with CGC, allowing the companies to operate synergistically.

Expansion strategy

Canopy Growth is consistently growing in European countries through acquisitions and supply agreements. Over the years, Canopy Growth acquired Annabis Medical to enter the Czech Republic as well as Daddy Cann Lesotho to enter the African market.

Furthermore, Canopy secured an agreement to supply high-quality cannabis products to the AusCann Group to serve the Australian market. Other major supply agreements are with:

  • Manitoba Liquor
  • Lotteries Corporation
  • Yukon Liquor Corporations
  • The Alberta Gaming Liquor and Cannabis Commission
  • BC Liquor Distribution Branch
  • MediPharm Labs
  • 48th North Cannabis

Notably, Canopy Growth recently signed an agreement with Luxembourg’s government to be its exclusive supplier of medical cannabis products.

Apart from scaling, Canopy Growth also concentrates on aggressive innovation. As a result, it invests more in research and development of intellectual property. Plus, it acquired state-of-the-art assets of Colorado-based ebbu. Canopy Growth invested in Storz & Bickel to optimize its vaporizer technology. In addition, the company has an innovation lab to conduct extensive research on cannabis products.

Canopy Growth: Revenues and profitability

According to its Q1 2019 earnings statement, Canopy Growth’s net revenue stood at $90 million. Of that, 59% originates from recreational marijuana and 23% comes from medical marijuana. However, its main revenue of $60 million originates from dry bud recreational marijuana. Its revenue from business-to-business transactions reached $50 million.

The company’s net loss of $1.2 billion primarily resulted from non-cash expenses due to amendments in its agreement with Constellation. Currently, its net EPS is -$3.70—almost four times as wide a loss as last quarter’s net EPS of -$0.98.

Canopy Growth’s outlook

Canopy Growth is developing new products for Canada’s Cannabis 2.0 initiative to increase its profitability. Its premium products include athletic drinks, relief therapies, and vaporizers.

The company also plans to develop high-yielding plant genetics to increase its capacity. Furthermore, its Spectrum Therapeutics focuses on improving clinical research and healthcare practices. Through these programs, it intends to become a leader in medical cannabis.

Notably, the company is partnering with celebrities such as Martha Stewart, Snoop Dogg, Drake, and Seth Rogan to improve its brand recognition.

In addition, Canopy Growth invested in a large-scale hemp production facility that plans to bring CBD products to the US market by the end of 2019. According to CEO Mark Zekulin, “We obviously believe a triggering event will occur and I think the other important part is … all that work we’re doing is intellectual property that we can make available to Acreage [Holdings] in the short term.”

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