Canopy Growth Corporation Reports Fourth Quarter and Fiscal year 2022 Financial Results

 
 

  Company Advances Premium Brand Driven Strategy, Laying a Foundation for Long-Term Sustainable Growth and Profitability  

 

Canopy Growth Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the fourth quarter and fiscal year ended March 31, 2022 . All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

 
 

  Canopy Growth Corporation Reports Fourth Quarter and Fiscal year 2022 Financial Results (CNW Group/Canopy Growth Corporation) 

 
 

  Hi   g   h   li   g   h   t   s  

 
  • The Company progressed its leading North American brand driven strategy with Canopy Growth entering into plans to acquire Wana Brands , the #1 cannabis edibles brand in North America , and Jetty Extracts ("Jetty"), a top 10 Cannabis brand in California , adding to the robust brand portfolio.
  •  
  • Premium brands gained ground with Canadian consumers with Company maintaining #1 share of premium flower category throughout FY2022 1 , led by in demand offerings from Doja, 7ACRES and 7ACRES Collective brands; and improved market share performance in the mainstream flower category in Q4 FY2022 with the Tweed rebrand and new Tweed product offerings in flower and beverages.
  •  
  • Storz & Bickel posted 22 nd year of consecutive revenue growth in FY2022; strong consumer demand for Storz & Bickel vaporizers including the new VOLCANO ONYX and MIGHTY+ drove 21% increase in revenue in Q4 FY2022 versus Q4 FY2021.
  •  
  • Increased distribution of BioSteel hydration products drove year-over-year revenue growth in FY2022 of 56% versus FY2021. Focusing strategic investments to accelerating brand growth with aspiration to be top 4 player in the North American sports drink market.
  •  
  • The Company generated Net revenue of $520 million in FY2022, representing a decline of 5% versus FY2021.
  •  
  • Through restructuring actions that were previously announced on April 26, 2022 , management expects to generate COGS savings of $30 - $50 million and SG&A expense reductions of $70 $100 million , both within 12 to 18 months.
  •  

"Canopy Growth is building the industry's leading portfolio of premium brands across North America . We've taken concrete steps to advance this ambition by strengthening our positioning in Canada , and further bolstering our U.S. THC ecosystem through the addition of two high performance brands in Wana Brands and Jetty Extracts. In the fiscal year ahead, we will remain focused on growing our market share in the key segments that will drive profitable growth and continuing to scale our premium brands across North America ."

 

  David Klein , Chief Executive Officer

 

"Achieving profitability is critical and we have undertaken additional initiatives to streamline and drive efficiencies for our global cannabis business.  In FY2023, we are focused on executing our path to profitability in Canada , while we continue to invest in high potential opportunities – particularly in BioSteel, and further developing our U.S. THC ecosystem, which we believe remains significantly under-appreciated by the market."

 

  Judy Hong , Chief Financial Officer

 
 
  
 
 

   1 Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company's internal proprietary market share tool that utilizes point of sales data supplied by a third-party data provider, government agencies and our own retail store operations across the country. The tool captures point of sale data from an average of 28% of stores in Alberta, British Columbia, Saskatchewan, Manitoba and Newfoundland & Labrador, point of sale data from 100% of stores in New Brunswick, Nova Scotia, Prince Edward Island and Quebec, as well as depletions and e-commerce sales data from the OCS.  

 
 
 

  FY2023 Priorities & Outlook  

 

With the foundation for long-term sustainable growth in place, Canopy Growth is committed to further advancing the Company's aspiration to become the leading premium cannabis branded company in North America .

 

In FY2023, Canopy will focus on:

 
  • Strengthening our market position in premium segments in Canada – driven by our flower cultivation strategy, delivering flower with in-demand attributes under the Doja and 7ACRES brands;
  •  
  • Making strategic investments to increase distribution, brand activation and new product development in high-growth consumer packaged good ("CPG") brands – BioSteel and Storz & Bickel;
  •  
  • Identifying opportunities to expand brands across the U.S. and within the Canadian recreational market, to fully realize the North American potential of the Canopy Growth brand portfolio; and
  •  
  • As a result of these actions, the Company expects to be Adjusted EBITDA positive in FY2024 excluding investments in BioSteel and U.S. THC.
  •  

  Fourth   Q   u   ar   te   r Fiscal Year 2022 Financial Summary  

 
 
                        
 

  (in     millions     of     Canadian  

 

  \dollars, unaudited)  

 
 
 

   Net   Revenue   

 
 

   Gross   margin   

 

   percentage   

 
 

   Adjusted   

 

   gross   margin   

 

   percentage 2   

 
 

   Net   loss   

 
 

   Adjusted   

 

   EBITDA 3   

 
 

   Free   cash   

 

   flow 4   

 
 

   Reported   

 
 
 

  $111.8  

 
 

  (142%)  

 
 

  (32%)  

 
 

  $(578.6)  

 
 

  $(121.8)  

 
 

  $(126.8)  

 
 

  vs. Q4 FY2021  

 
 
 

  (25%)  

 
 

  (14,900) bps  

 
 

  (4,600) bps  

 
 

  6%  

 
 

  (30%)  

 
 

  (2%)  

 
 
 

  F   isca   l Year 2022 Financial Summary  

 
 
                        
 

  (in     millions     of     Canadian  

 

  \dollars, unaudited)  

 
 
 

   Net   Revenue   

 
 

   Gross   margin   

 

   percentage   

 
 

   Adjusted   

 

   gross   margin   

 

   percentage 5   

 
 

   Net   loss   

 
 

   Adjusted   

 

   EBITDA 3   

 
 

   Free   cash   

 

   flow 4   

 
 

   Reported   

 
 
 

  $520.3  

 
 

  (37%)  

 
 

  (11%)  

 
 

  $(320.5)  

 
 

  $(415.4)  

 
 

  $(582.5)  

 
 

  vs. FY2021  

 
 
 

  (5%)  

 
 

  (4,900) bps  

 
 

  (2,800) bps  

 
 

  81%  

 
 

  (22%)  

 
 

  8%  

 
 
 

 

 
 
     
 
 

   2 Adjusted gross margin is a non-GAAP measure, and for Q4 FY2022 excludes $4.2 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis and $119.1 million of restructuring costs recorded in cost of goods sold (Q4 FY2021 - excludes $nil related to the flow-through of inventory step-up and $10.3 million of restructuring costs recorded in cost of goods sold). See "Non-GAAP Measures".  

 
 

   3 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures".  

 
 

   4 Free cash flow is a non-GAAP measure. See "Non-GAAP Measures".  

 
 

   5 Adjusted gross margin is a non-GAAP measure, and for FY2022 excludes $11.8 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis and $123.7 million of restructuring costs recorded in cost of goods sold (FY2021 - excludes $1.5 million related to the flow-through of inventory step-up and $26.0 million of restructuring costs recorded in cost of goods sold). See "Non-GAAP Measures".  

 
 
 

  Fourth   Q   u   ar   te   r and Fiscal Year 2022 Financial Summary  

 

  R   e   v   e   nu   e   s   :  

 

Net revenue of $112 million in Q4 FY2022 declined 25% versus Q4 FY2021. Total global cannabis net revenue of $66 million in Q4 FY2022, represented a decline of 35% over Q4 FY2021. Other consumer products revenue of $46 million in Q4 FY2022, represented a decline of 3% over Q4 FY2021. Excluding the impact from acquired businesses and divestiture of C3, net revenue declined 26% and global cannabis net revenue declined 38% versus Q4 FY2021.

 

Net revenue of $520 million in FY2022 declined 5% versus FY2021. Total global cannabis net revenue of $337 million in FY2022, represented a decline of 11% over FY2021. Other consumer products revenue of $183 million in FY2022, represented an increase of 9% over FY2021. Excluding the impact from acquired businesses and divestiture of C3, net revenue declined 9% and global cannabis net revenue declined 19% versus FY2021.

 

  G   r   o   s   s margin:  

 

Reported gross margin in Q4 FY2022 was (142%) as compared to 7% in Q4 FY2021. Excluding non-cash restructuring costs recorded in COGS of $119 million and inventory step-up charges from acquisitions of $4 million , adjusted gross margin was (32%). Comparatively gross margin in Q4 FY2021 was impacted by restructuring charges totaling $10 million . Gross margin in Q4 FY2022 was further impacted by lower production output and price compression in the Canadian recreational business as well as higher third-party shipping, distribution and warehousing costs across North America .

 

Reported gross margin in FY2022 was (37%) as compared to 12% in FY2021. Excluding non-cash restructuring costs recorded in cost of goods sold of $124 million and inventory step-up charges from acquisitions of $12 million , adjusted gross margin was approximately (11%). Gross margin in FY2022 was impacted by a year-over-year decrease in net revenue and continued price compression in the Canadian recreational business, inventory write-offs driven by lower than expected demand as well as higher third-party shipping, distribution and warehousing costs across North America . Gross margin in FY2022 benefited from payroll subsidies in the amount of $24 million received from the Canadian government, pursuant to a COVID-19 relief program, compared to $6 million in FY2021.

 

  O   p   e   rat   in   g expenses:  

 

Total SG&A ("SG&A") expenses in Q4 FY2022 declined by 21% versus Q4 FY2021, driven by year-over-year reductions in General & Administrative ("G&A") and Research and Development ("R&D") expenses. G&A expenses declined 38% year-over-year primarily due to reductions in staffing, professional fees, executive compensation and employee bonus, and continued cost reductions, partially offset by lower payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program, relative to the prior year. R&D expenses declined 45% year-over-year principally due to a more disciplined approach to R&D investments and the closure of certain R&D facilities in the prior year. Sales & Marketing ("S&M") expenses were flat year-over-year.

 

Total SG&A expenses in FY2022 declined by 18% versus FY2021, driven by year-over-year reductions in G&A and R&D expenses, partially offset by an increase in S&M expenses. G&A expenses declined 46% year-over-year primarily due to reductions in staffing, professional fees, executive compensation and employee bonus, and continued cost reductions. R&D expenses declined 44% year-over-year principally due to a more disciplined approach to R&D investments and the closure of certain R&D facilities in the prior year. S&M expenses increased 23% year-over-year primarily due to a return to more normal advertising and promotional spending in fiscal 2022. S&M expenses was further driven by higher sponsorship fees associated with BioSteel and increased sales and marketing costs associated with the acquisitions of Supreme Cannabis and Ace Valley .

 

  N   e   t Loss:  

 

Net Loss in Q4 FY2022 was $579 million , which is a $38 million improvement versus Q4 FY2021, driven primarily by non-cash fair value changes, partially offset by higher non-cash asset impairment and restructuring charges.

 

Net Loss in FY2022 was $320 million , which is a $1,350 million improvement versus FY2021, driven primarily by non-cash fair value changes, lower operating expenses, including lower non-cash asset impairment and restructuring charges, partially offset by lower gross margins.

 

  Adjusted EBITDA:  

 

Adjusted EBITDA loss in Q4 FY2022 was $122 million, a $28 million increase in Adjusted EBITDA loss versus Q4 FY2021 primarily driven by lower sales and a decline in gross margins, partially offset by the reduction in our total SG&A expenses.

 

Adjusted EBITDA loss in FY2022 was $415 million , a $75 million increase in Adjusted EBITDA loss versus FY2021, driven primarily driven by lower sales and a decline in gross margins, partially offset by the reduction in our total SG&A expenses.

 

  F   r   e   e Cash Flow:  

 

Free Cash Flow in Q4 FY2022 was an outflow of $127 million, a 2% increase in outflow versus Q4 FY2021. Relative to Q4 FY2021, the Free Cash Flow outflow increase reflects higher interest paid partially offset by lower capital expenditures.

 

Free Cash Flow in FY2022 was an outflow of $582 million , an 8% decrease in outflow versus FY2021. Relative to FY2021, the Free Cash Flow outflow decrease is due to lower S&GA expenses and reduction in capital expenditures, partially offset by higher cash interest payments.

 

  C   as   h Position:  

 

Cash and Short-term investments amounted to $1.4 billion at March 31 , 2022, representing a decrease of $0.9 billion from $2 .3 billion at March 31 , 2021 reflecting EBITDA losses, capital investments and the upfront payment made as consideration for the option to acquire Wana Brands upon federal permissibility of THC in the U.S.

 

  Business Highlights  

 

   Developing a robust North American brand driven strategy -   In the very competitive Canadian adult-use market, the Company's Doja, 7ACRES, 7ACRES Craft Collection, Deep Space, Tweed, and Ace Valley branded product offerings:

 
  • Maintained Canopy Growth's #1 share of the premium flower market in FY2022 by leveraging established cannabis brands – Doja and 7ACRES;

  •  
  • Nearly doubled the Company's share of the mainstream flower market in Q4 FY2022. Performance benefited from strong consumer demand for new Tweed flower strains, Chemdawg and Powdered Donuts, launched in Q3 FY2022;

  •  
  • The introduction of new beverage flavour extensions including, Tweed Iced Tea Guava and Deep Space Orange Orbit, have helped drive Tweed to the #1 market share rank in the under 5 mg THC beverage category and Deep Space is the fastest growing brand and #2 rank in the over 5 mg THC beverage category; and

  •  
  • Following investments in plans to acquire Wana Brands and Jetty Extracts, exploring avenues through which these brands can expand across the U.S. and within the Canadian recreational market, to fully realize the North American potential.
  •  

   Driving Growth in our Consumer Product Brands   

 
  •   Storz & Bickel : Gains in distribution and strong consumer demand for new Storz & Bickel vaporizers including the VOLCANO ONYX and MIGHTY+ drove 21% increase in revenue in Q4 FY2022 versus Q4 FY2021.

  •  
  •   BioSteel : Gains in distribution and sales velocity of BioSteel ready-to-drink ("RTD") products drove a 56% increase in revenue in FY2022 versus FY2021; BioSteel RTDs have achieved 18% ACV 7 ; New Grape and Cherry Lime RTD flavors began shipping in Q4 FY202
  •  
  •   Martha Stewart CBD : Launched new Martha Stewart CBD Tropical Medley CBD Wellness Gummies in Q4 FY2022. Launched Martha Stewart CBD Wellness Topicals - Super Strength CBD, Sleep Science CBD and Daily De-Stress CBD Creams.
  •  

   Strengthening U.S. THC ecosystem, investing in plans to acquire scalable brands in must‑win categories   

 
  •   Jetty Extracts 8 : Strengthened U.S. THC ecosystem with plan to acquire Jetty, a Top 5 cannabis brand 9 , Top 10 California vape brand 9 , and market leader with greater than 75% of the solventless vape market 10 . Plan establishes the opportunity to scale the Jetty brand to additional U.S. state markets and across the border into Canada leveraging Jetty's industry leading intellectual property.

  •  
  •    Wana Brands   11 : Wana strengthened its management team with the appointment of a new Chief Financial Officer and new Chief Operating Officer. In addition, the company expanded its U.S. footprint in Q4 FY2022 with the signing of license agreements covering Puerto Rico , its fourteenth license in the U.S.. At least three more markets are expected to come online by the end of CY2022. In Q4 FY2022, launched Wana Quick Spectrum Live Rosin Quick Fast-Acting Gummies in Colorado .
  •  
 
      
 
 

   7 IRI data for the 4 weeks ended April 17, 2022  

 
 

   8 Until such time as the Company elects to exercise its rights to acquire Jetty, the Company will have no direct or indirect economic or voting interests in Jetty, the Company will not directly or indirectly control Jetty, and the Company, on the one hand, and Jetty, on the other hand, will continue to operate independently of one another.  

 
 

   9 Based on March 2022 BDSA data for dollars sold for all product categories  

 
 

   10 Based on year-to-date BDSA data for dollars sold of rosin cartridges through March 2022  

 
 

   11 Until such time as the Company exercises its rights to acquire each Wana Entity, the Company will have no economic or voting interests in Wana, the Company will not control Wana, and the Company and Wana will continue to operate independently of one another.  

 
 
 

   Driving brand awareness through omni channel activations   

 

  Fourth Quarter and Fiscal Year 2022 Revenue Review  

 

  Revenue by Channel  

 
 
                                                                                                                                                        
 

   (in millions of Canadian dollars, unaudited)   

 
 
 

   Q4 FY2022   

 
 

   Q4 FY2021   

 
 

   Vs. Q4
FY2021
 
 

 
 

   FY2022   

 
 

   FY2021   

 
 

   Vs. FY2021   

 
 

   Canadian recreational cannabis   

 
 
 
 
 
 
 
 
 

  Business to business 12  

 
 
 

  $25.8  

 
 

  $43.3  

 
 

  (40%)  

 
 

  $143.7  

 
 

  $163.6  

 
 

  (12%)  

 
 

  Business to consumer  

 
 
 

  $13.1  

 
 

  $17.8  

 
 

  (26%)  

 
 

  $61.6  

 
 

  $66.0  

 
 

  (7%)  

 
 
 
 

   $38.9   

 
 

   $61.1   

 
 

   (36%)   

 
 

   $205.3   

 
 

   $229.6   

 
 

   (11%)   

 
 

   Canadian medical cannabis 13   

 
 
 

  $13.1  

 
 

  $13.7  

 
 

  (4%)  

 
 

  $52.6  

 
 

  $55.5  

 
 

  (5%)  

 
 
 
 

   $52.0   

 
 

   $74.8   

 
 

   (30%)   

 
 

   $257.9   

 
 

   $285.1   

 
 

   (10%)   

 
 

   International and other   

 
 
 
 
 
 
 
 
 

  C 3  

 
 
 

  $3.1  

 
 

  $15.8  

 
 

  (80%)  

 
 

  $36.1  

 
 

  $62.3  

 
 

  (42%)  

 
 

  Other 14  

 
 
 

  $10.9  

 
 

  $10.7  

 
 

  2%  

 
 

  $43.2  

 
 

  $31.3  

 
 

  38%  

 
 
 
 

   $14.0   

 
 

   $26.5   

 
 

   (47%)   

 
 

   $79.3   

 
 

   $93.6   

 
 

   (15%)   

 
 

   Global cannabis net revenue   

 
 
 

   $66.0   

 
 

   $101.3   

 
 

   (35%)   

 
 

   $337.2   

 
 

   $378.7   

 
 

   (11%)   

 
 

   Other consumer products   

 
 
 
 
 
 
 
 
 

  Storz & Bickel  

 
 
 

  $21.6  

 
 

  $17.9  

 
 

  21%  

 
 

  $85.4  

 
 

  $81.0  

 
 

  5%  

 
 

  This Works  

 
 
 

  $6.0  

 
 

  $8.5  

 
 

  (29%)  

 
 

  $32.3  

 
 

  $33.3  

 
 

  (3%)  

 
 

  BioSteel 15  

 
 
 

  $13.5  

 
 

  $13.6  

 
 

  (1%)  

 
 

  $44.6  

 
 

  $28.5  

 
 

  56%  

 
 

  Other  

 
 
 

  $4.7  

 
 

  $7.1  

 
 

  (34%)  

 
 

  $20.8  

 
 

  $25.1  

 
 

  (17%)  

 
 

   Other consumer products revenue   

 
 
 

   $45.8   

 
 

   $47.1   

 
 

   (3%)   

 
 

   $183.1   

 
 

   $167.9   

 
 

   9%   

 
 

   Net revenue   

 
 
 

   $111.8   

 
 

   $148.4   

 
 

   (25%)   

 
 

   $520.3   

 
 

   $546.6   

 
 

   (5%)   

 
 
 

 

 
 
     
 
 

   12 For Q4 FY2022, amount is net of excise taxes of $13.2 million and other revenue adjustments of $3.3 million (Q4 FY2021 - $17.5 million and $3.1 million, respectively). For FY2022, amount is net of excise taxes of $56.7 million and other revenue adjustments of $7.3 million (FY2021 - $54.9 million and $14.0 million, respectively).  

 
 

   13 For Q4 FY2022, amount is net of excise taxes of $1.2 million (Q4 FY2021 - $1.4 million). For FY2022, amount is net of excise taxes of $5.2 million (FY2021 - $5.6 million).  

 
 

   14 For Q4 FY2022, amount reflects other revenue adjustments of $1.0 million (Q4 FY2021 - $0.3 million). For FY2022, amount reflects other revenue adjustments of $4.3 million (FY2021 - $0.7 million).  

 
 

   15 For Q4 FY2022, amount reflects other revenue adjustments of $3.9 million (Q4 FY2021 - $4.2 million). For FY2022, amount reflects other revenue adjustments of $9.9 million (FY2021 - $9.2 million).  

 
 
 

  Revenue by Form  

 
 
                                                                                                                                                                                        
 

   (in millions of Canadian dollars, unaudited)   

 
 
 

   Q4 FY2022   

 
 

   Q4 FY2021   

 
 

   Vs. Q4
FY2021
 
 

 
 

   FY2022   

 
 

   FY2021   

 
 

   Vs. FY2021   

 
 

   Canadian recreational cannabis   

 
 
 
 
 
 
 
 
 

  Dry bud 16,17  

 
 
 

  $41.9  

 
 

  $67.9  

 
 

  (38%)  

 
 

  $211.7  

 
 

  $238.0  

 
 

  (11%)  

 
 

  Oils and softgels 16,17  

 
 
 

  $5.5  

 
 

  $6.7  

 
 

  (18%)  

 
 

  $25.5  

 
 

  $28.8  

 
 

  (11%)  

 
 

  Beverages, edibles, topicals and vapes 16,17  

 
 
 

  $8.0  

 
 

  $7.1  

 
 

  13%  

 
 

  $32.1  

 
 

  $31.7  

 
 

  1%  

 
 

  Other revenue adjustments 17  

 
 
 

  $(3.3)  

 
 

  $(3.1)  

 
 

  (6%)  

 
 

  $(7.3)  

 
 

  $(14.0)  

 
 

  48%  

 
 

  Excise taxes  

 
 
 

  $(13.2)  

 
 

  $(17.5)  

 
 

  25%  

 
 

  $(56.7)  

 
 

  $(54.9)  

 
 

  (3%)  

 
 
 
 

   $38.9   

 
 

   $61.1   

 
 

   (36%)   

 
 

   $205.3   

 
 

   $229.6   

 
 

   (11%)   

 
 

   Medical cannabis and other 18   

 
 
 
 
 
 
 
 
 

  Dry bud  

 
 
 

  $13.7  

 
 

  $9.7  

 
 

  41%  

 
 

  $45.4  

 
 

  $40.5  

 
 

  12%  

 
 

  Oils and soft gels  

 
 
 

  $11.6  

 
 

  $25.5  

 
 

  (55%)  

 
 

  $71.2  

 
 

  $101.9  

 
 

  (30%)  

 
 

  Beverages, edibles, topicals and vapes  

 
 
 

  $3.0  

 
 

  $6.4  

 
 

  (53%)  

 
 

  $20.5  

 
 

  $12.3  

 
 

  67%  

 
 

  Excise taxes  

 
 
 

  $(1.2)  

 
 

  $(1.4)  

 
 

  14%  

 
 

  $(5.2)  

 
 

  $(5.6)  

 
 

  7%  

 
 
 
 

   $27.1   

 
 

   $40.2   

 
 

   (33%)   

 
 

   $131.9   

 
 

   $149.1   

 
 

   (12%)   

 
 

   Global cannabis net revenue   

 
 
 

   $66.0   

 
 

   $101.3   

 
 

   (35%)   

 
 

   $337.2   

 
 

   $378.7   

 
 

   (11%)   

 
 

   Other consumer products   

 
 
 
 
 
 
 
 
 

  Storz & Bickel  

 
 
 

  $21.6  

 
 

  $17.9  

 
 

  21%  

 
 

  $85.4  

 
 

  $81.0  

 
 

  5%  

 
 

  This Works  

 
 
 

  $6.0  

 
 

  $8.5  

 
 

  (29%)  

 
 

  $32.3  

 
 

  $33.3  

 
 

  (3%)  

 
 

  BioSteel 18  

 
 
 

  $13.5  

 
 

  $13.6  

 
 

  (1%)  

 
 

  $44.6  

 
 

  $28.5  

 
 

  56%  

 
 

  Other  

 
 
 

  $4.7  

 
 

  $7.1  

 
 

  (34%)  

 
 

  $20.8  

 
 

  $25.1  

 
 

  (17%)  

 
 

   Other consumer products revenue   

 
 
 

   $45.8   

 
 

   $47.1   

 
 

   (3%)   

 
 

   $183.1   

 
 

   $167.9   

 
 

   9%   

 
 
 
 
 
 
 
 
 
 

   Net revenue   

 
 
 

   $111.8   

 
 

   $148.4   

 
 

   (25%)   

 
 

   $520.3   

 
 

   $546.6   

 
 

   (5%)   

 
 
 

  Canadian Cannabis  

 
  • Recreational B2B net sales in Q4 FY2022 decreased 40% over the prior year period primarily due to the continued insufficient supply of flower products with in-demand attributes and continued price compression, particularly in the value-priced dried flower category. These factors were partially offset by contribution from the acquisitions of Ace Valley and Supreme Cannabis.
  •  
  • Recreational B2C net sales in Q4 FY2022 decreased 26% versus Q4 FY2021 largely driven by increased competition from the rapid increase in third party retail locations across provinces.
  •  
  • Medical net revenue in Q4 FY2022 decreased 4% from Q4 FY2021 driven primarily by higher average order sizes offset by a fewer number of orders.
  •  

  International Cannabis  

 
  • C 3 revenue in Q4 FY2022 decreased 80% year-over-year as a result of the divestiture that was completed on January 31, 2022 .
  •  
  • Other revenue in Q4 FY2022 increased 2% over the prior year period primarily due to bulk cannabis sales by Supreme Cannabis into the Israel medical cannabis market, offset by lower U.S. CBD sales.
  •  

  Other Consumer Products  

 
  • BioSteel sales in Q4 FY2022 decreased 1% over Q4 FY2021 in part due to shipment timing.
  •  
  • Storz & Bickel vaporizer revenue in Q4 FY2022 increased 21% over Q4 FY2021 due primarily to sales of new VOLCANO ONYX and MIGHTY+ vaporizers launched late in the second quarter of FY2022.
  •  
  • This Works sales in Q4 FY2022 decreased 29% over Q4 FY2021 due in part to lapping strong sales in the prior year.
  •  

The Q4 FY2022, FY2022, Q4 FY2021 and FY2021 financial results presented in this press release have been prepared in accordance with U.S. GAAP.

 
 
    
 
 

   16 Excludes the impact of other revenue adjustments.  

 
 

   17 Other revenue adjustments represent the Company's determination of returns and pricing adjustments, and relate to the Canadian recreational business‐to‐business channel.  

 
 

   18 Includes the impact of other revenue adjustments, which represent the Company's determination of returns and other pricing adjustments.  

 
 
 

  Webcast and Conference Call Information  

 

The Company will host a conference call and audio webcast with David Klein , CEO and Judy Hong , CFO at 10:00 AM Eastern Time on May 27, 2022.

 

  Webcast Information  

 

A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1540225&tp_key=a04693a9b2  

 

  Replay Information  

 

A replay will be accessible by webcast until 11:59 PM ET on August 25, 2022 at:
https://produceredition.webcasts.com/starthere.jsp?ei=1540225&tp_key=a04693a9b2  

 

  Non-GAAP Measures  

 

Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. Asset impairments related to periodic changes to the Company's supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company's Annual Report on Form 10-K to be filed with the Securities and Exchange Commission ("SEC").

 

Free Cash Flow is a non- GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Company's Annual Report on Form 10-K to be filed with the SEC.

 

Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted Gross Margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted Gross Margin Percentage is calculated as Adjusted Gross Margin divided by net revenue. The Adjusted Gross Margin and Adjusted Gross Margin Percentage reconciliation is presented within this news release.

 

  About Canopy Growth Corporation  

 

Canopy Growth (TSX:WEED,NASDAQ:CGC ) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany . Through our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada , the United States , and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit www.canopygrowth.com .

 

  Notice Regarding Forward Looking Statements  

 

This press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect," "project," "projections," "forecasts," "plans," "seeks," "anticipates," "potential," "proposed," "will," "should," "could," "would," "may," "likely," "designed to," "foreseeable future," "believe," "scheduled" and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

 

Forward-looking statements include, but are not limited to, statements with respect to:

 
  • the uncertainties associated with the COVID-19 pandemic, including our ability, and the ability of our suppliers and distributors, to effectively manage the restrictions, limitations and health issues presented by the COVID-19 pandemic, the ability to continue our production, distribution and sale of our products and the demand for and use of our products by consumers, disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending;
  •  
  • laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to U.S. hemp (including CBD) products and the scope of any regulations by the U.S. Food and Drug Administration (the "FDA"), the U.S. Drug Enforcement Administration (the "DEA"), the U.S. Federal Trade Commission (the "FTC"), the U.S. Patent and Trademark Office (the "USPTO"), the U.S. Department of Agriculture (the "USDA") and any state equivalent regulatory agencies over U.S. hemp (including CBD) products;
  •  
  • expectations regarding the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;
  •  
  • expectations related to our announcement of certain restructuring actions (the "Restructuring Actions") and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;
  •  
  • our ability to refinance debt as and when required on terms favorable to us and comply with covenants contained in our debt facilities and debt instruments;
  •  
  • expectations regarding the laws and regulations and any amendments thereto relating to the U.S. hemp industry in the U.S., including the promulgation of regulations for the U.S. hemp industry by the USDA and relevant state regulatory authorities;
  •  
  • expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, strategic alliances, equity investments and dispositions;
  •  
  • the amended plan of arrangement with Acreage Holdings, Inc., including the consummation of such acquisition;
  •  
  • the definitive agreements with Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (each, a "Wana Entity"), including the consummation of the acquisition of each Wana Entity;
  •  
  • the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;
  •  
  • our international activities and joint venture interests, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact;
  •  
  • our ability to successfully create and launch brands and further create, launch and scale cannabis-based products and U.S. hemp-derived consumer products in jurisdictions where such products are legal and that we currently operate in;
  •  
  • the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids;
  •  
  • the anticipated benefits and impact of the investments in us (the "CBI Group Investments") from Constellation Brands, Inc. ("CBI") and its affiliates (together, the "CBI Group");
  •  
  • the potential exercise of the warrants held by the CBI Group, pre-emptive rights and/or top-up rights held by the CBI Group, including proceeds to us that may result therefrom or the potential conversion of the convertible senior notes issued by Canopy Growth and held by the CBI Group;
  •  
  • expectations regarding the use of proceeds of equity financings, including the proceeds from the CBI Group Investments;
  •  
  • the legalization of the use of cannabis for medical or recreational in jurisdictions outside of Canada , the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized;
  •  
  • our ability to execute on our strategy and the anticipated benefits of such strategy;
  •  
  • the ongoing impact of the legalization of additional cannabis product types and forms for recreational use in Canada , including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets;
  •  
  • expectations of the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;
  •  
  • the ongoing impact of developing provincial, territorial and municipal regulations pertaining to the sale and distribution of cannabis, the related timing and impact thereof, as well as the restrictions on federally regulated cannabis producers participating in certain retail markets and our intentions to participate in such markets to the extent permissible;
  •  
  • the timing and nature of legislative changes in the U.S. regarding the regulation of cannabis including tetrahydrocannabinol ("THC");
  •  
  • the future performance of our business and operations;
  •  
  • our competitive advantages and business strategies;
  •  
  • the competitive conditions of the industry;
  •  
  • the expected growth in the number of customers using our products;
  •  
  • our ability or plans to identify, develop, commercialize or expand our technology and research and development initiatives in cannabinoids, or the success thereof;
  •  
  • expectations regarding revenues, expenses and anticipated cash needs;
  •  
  • expectations regarding cash flow, liquidity and sources of funding;
  •  
  • expectations regarding capital expenditures;
  •  
  • the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses;
  •  
  • the expected growth in our growing, production and supply chain capacities;
  •  
  • expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations;
  •  
  • expectations with respect to future production costs;
  •  
  • expectations with respect to future sales and distribution channels and networks;
  •  
  • the expected methods to be used to distribute and sell our products;
  •  
  • our future product offerings;
  •  
  • the anticipated future gross margins of our operations;
  •  
  • accounting standards and estimates;
  •  
  • expectations regarding our distribution network;
  •  
  • expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements; and
  •  
  • expectations on price changes in cannabis markets.
  •  

Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.

 

The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management's perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

 

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the "SEC") and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products; consumer demand for cannabis and U.S. hemp products; our limited operating history; inflation risks; the risks and uncertainty regarding future product development; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; the risk that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; the implementation and effectiveness of key personnel changes; the risks that our Restructuring Actions will not result in the expected cost savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel; risks associated with jointly owned investments; risks relating to our current and future operations in emerging markets; future levels of revenues and the impact of increasing levels of competition; risks related to the protection and enforcement of our intellectual property rights; our ability to manage disruptions in credit markets or changes to our credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States ; business strategies, growth opportunities and expected investment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; risks related to stock exchange restrictions; risks associated with divestment and restructuring; volatility in and/or degradation of general economic, market, industry or business conditions; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; third-party transportation risks; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to our business and products; and the factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended March 31, 2022 . Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

 

Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.

 

  Schedule 1  

 
 
                                                                                                                                                                                                      
 

   CANOPY GROWTH CORPORATION   

 

   CONSOLIDATED BALANCE SHEETS   

 

  (in thousands of Canadian dollars, except number of shares and per share data, unaudited)  

 
 
 
 

   March 31,
 
   2022   

 
 
 

   March   31,
 
   2021   

 
 

   ASSETS   

 
 

  Current assets:  

 
 
 
 
 
 

  Cash and cash equivalents  

 
 
 

  $776,005  

 
 
 

  $1,154,653  

 
 

  Short-term investments  

 
 
 

  595,651  

 
 
 

  1,144,563  

 
 

  Restricted short-term investments  

 
 
 

  12,216  

 
 
 

  11,332  

 
 

  Amounts receivable, net  

 
 
 

  96,443  

 
 
 

  92,435  

 
 

  Inventory  

 
 
 

  204,387  

 
 
 

  367,979  

 
 

  Prepaid expenses and other assets  

 
 
 

  52,700  

 
 
 

  67,232  

 
 

  Total current assets  

 
 
 

  1,737,402  

 
 
 

  2,838,194  

 
 

  Other financial assets  

 
 
 

  800,328  

 
 
 

  708,167  

 
 

  Property, plant and equipment  

 
 
 

  942,780  

 
 
 

  1,074,537  

 
 

  Intangible assets  

 
 
 

  252,695  

 
 
 

  308,167  

 
 

  Goodwill  

 
 
 

  1,866,503  

 
 
 

  1,889,354  

 
 

  Other assets  

 
 
 

  15,342  

 
 
 

  5,061  

 
 

  Total assets  

 
 
 

  $5,615,050  

 
 
 

  $6,823,480  

 
 
 
 
 
 
 

   LIABILITIES AND SHAREHOLDERS' EQUITY   

 
 

  Current liabilities:  

 
 
 
 
 
 

  Accounts payable  

 
 
 

  $64,270  

 
 
 

  $67,262  

 
 

  Other accrued expenses and liabilities  

 
 
 

  75,278  

 
 
 

  100,813  

 
 

  Current portion of long-term debt  

 
 
 

  9,296  

 
 
 

  9,827  

 
 

  Other liabilities  

 
 
 

  64,054  

 
 
 

  106,428  

 
 

  Total current liabilities  

 
 
 

  212,898  

 
 
 

  284,330  

 
 

  Long-term debt  

 
 
 

  1,491,695  

 
 
 

  1,573,136  

 
 

  Deferred income tax liabilities  

 
 
 

  15,991  

 
 
 

  21,379  

 
 

  Liability arising from Acreage Arrangement  

 
 
 

  47,000  

 
 
 

  600,000  

 
 

  Warrant derivative liability  

 
 
 

  26,920  

 
 
 

  615,575  

 
 

  Other liabilities  

 
 
 

  190,049  

 
 
 

  107,240  

 
 

  Total liabilities  

 
 
 

  1,984,553  

 
 
 

  3,201,660  

 
 

  Commitments and contingencies  

 
 
 
 
 
 

  Redeemable noncontrolling interest  

 
 
 

  36,200  

 
 
 

  135,300  

 
 

  Canopy Growth Corporation shareholders' equity:  

 
 
 
 
 
 

  Common shares - $nil par value; Authorized - unlimited number of shares;  

 

  Issued - 394,422,604 shares and 382,875,179 shares, respectively  

 
 
 

  7,482,809  

 
 
 

  7,168,557  

 
 

  Additional paid-in capital  

 
 
 

  2,519,766  

 
 
 

  2,415,650  

 
 

  Accumulated other comprehensive loss  

 
 
 

  (42,282)  

 
 
 

  (34,240)  

 
 

  Deficit  

 
 
 

  (6,370,337)  

 
 
 

  (6,068,156)  

 
 

  Total Canopy Growth Corporation shareholders' equity  

 
 
 

  3,589,956  

 
 
 

  3,481,811  

 
 

  Noncontrolling interests  

 
 
 

  4,341  

 
 
 

  4,709  

 
 

  Total shareholders' equity  

 
 
 

  3,594,297  

 
 
 

  3,486,520  

 
 

  Total liabilities and shareholders' equity  

 
 
 

  $5,615,050  

 
 
 

  $6,823,480  

 
 
 

  Schedule 2  

 
 
                                                                                                                                                                                                                              
 

   CANOPY GROWTH CORPORATION   

 

   CONSOLIDATED STATEMENTS OF OPERATIONS   

 

  (in thousands of Canadian dollars, except number of shares and per share data, unaudited)  

 
 
 
 
 
 
 
 
 
 
 
 
 

   Three months ended March   31,   

 
 
 

   Years ended March   31,   

 
 
 
 

   2022   

 
 
 

   2021   

 
 
 

   2022   

 
 
 

   2021   

 
 

  Revenue  

 
 
 

  $126,123  

 
 
 

  $167,375  

 
 
 

  $582,218  

 
 
 

  $607,198  

 
 

  Excise taxes  

 
 
 

  14,353  

 
 
 

  18,936  

 
 
 

  61,893  

 
 
 

  60,549  

 
 

  Net revenue  

 
 
 

  111,770  

 
 
 

  148,439  

 
 
 

  520,325  

 
 
 

  546,649  

 
 

  Cost of goods sold  

 
 
 

  271,012  

 
 
 

  138,639  

 
 
 

  713,379  

 
 
 

  479,689  

 
 

  Gross margin  

 
 
 

  (159,242)  

 
 
 

  9,800  

 
 
 

  (193,054)  

 
 
 

  66,960  

 
 

  Operating expenses:  

 
 
 
 
 
 
 
 
 
 

  Selling, general and administrative expenses  

 
 
 

  117,591  

 
 
 

  148,666  

 
 
 

  472,756  

 
 
 

  575,389  

 
 

  Share-based compensation  

 
 
 

  11,669  

 
 
 

  18,517  

 
 
 

  47,525  

 
 
 

  91,149  

 
 

  Expected credit losses on financial assets and related charges  

 
 
 

  -  

 
 
 

  1,000  

 
 
 

  -  

 
 
 

  109,480  

 
 

  Asset impairment and restructuring costs  

 
 
 

  241,141  

 
 
 

  74,819  

 
 
 

  369,339  

 
 
 

  534,398  

 
 

  Total operating expenses  

 
 
 

  370,401  

 
 
 

  243,002  

 
 
 

  889,620  

 
 
 

  1,310,416  

 
 

  Operating loss  

 
 
 

  (529,643)  

 
 
 

  (233,202)  

 
 
 

  (1,082,674)  

 
 
 

  (1,243,456)  

 
 

  Loss from equity method investments  

 
 
 

  -  

 
 
 

  (11,778)  

 
 
 

  (100)  

 
 
 

  (52,629)  

 
 

  Other income (expense), net  

 
 
 

  (57,428)  

 
 
 

  (366,770)  

 
 
 

  753,341  

 
 
 

  (387,876)  

 
 

  Loss before income taxes  

 
 
 

  (587,071)  

 
 
 

  (611,750)  

 
 
 

  (329,433)  

 
 
 

  (1,683,961)  

 
 

  Income tax recovery (expense)  

 
 
 

  8,458  

 
 
 

  (4,945)  

 
 
 

  8,948  

 
 
 

  13,141  

 
 

  Net loss  

 
 
 

  (578,613)  

 
 
 

  (616,695)  

 
 
 

  (320,485)  

 
 
 

  (1,670,820)  

 
 

  Net (loss) income attributable to noncontrolling interests and  

 

  redeemable noncontrolling interest  

 
 
 

  (3,997)  

 
 
 

  83,283  

 
 
 

  (18,304)  

 
 
 

  74,100  

 
 

  Net loss attributable to Canopy Growth Corporation  

 
 
 

  $(574,616)  

 
 
 

  $(699,978)  

 
 
 

  $(302,181)  

 
 
 

  $(1,744,920)  

 
 
 
 
 
 
 
 
 
 
 

  Basic and diluted loss per share  

 
 
 

  $(1.46)  

 
 
 

  $(1.85)  

 
 
 

  $(0.77)  

 
 
 

  $(4.69)  

 
 

  Basic and diluted weighted average common shares outstanding  

 
 
 

  394,248,404  

 
 
 

  378,519,753  

 
 
 

  391,324,285  

 
 
 

  371,662,296  

 
 
 

  Schedule 3  

 
 
                                                                                                                                                                                                                                               
 

   CANOPY GROWTH CORPORATION   

 

   CONSOLIDATED STATEMENTS OF CASH FLOWS   

 

  (in thousands of Canadian dollars, unaudited)  

 
 
 
 
 
 
 
 
 

   Years ended March   31,   

 
 
 
 

   2022   

 
 
 

   2021   

 
 

   Cash flows from operating activities:   

 
 
 
 
 
 

  Net loss  

 
 
 

  $(320,485)  

 
 
 

  $(1,670,820)  

 
 

  Adjustments to reconcile net loss to net cash used in operating activities:  

 
 
 
 
 
 

  Depreciation of property, plant and equipment  

 
 
 

  76,247  

 
 
 

  70,914  

 
 

  Amortization of intangible assets  

 
 
 

  38,171  

 
 
 

  56,204  

 
 

  Share of loss on equity method investments  

 
 
 

  100  

 
 
 

  52,629  

 
 

  Share-based compensation  

 
 
 

  47,525  

 
 
 

  91,149  

 
 

  Asset impairment and restructuring costs  

 
 
 

  332,949  

 
 
 

  519,209  

 
 

  Expected credit losses on financial assets and related charges  

 
 
 

  -  

 
 
 

  109,480  

 
 

  Income tax recovery  

 
 
 

  (8,948)  

 
 
 

  (13,141)  

 
 

  Non-cash fair value adjustments  

 
 
 

  (866,739)  

 
 
 

  380,758  

 
 

  Change in operating assets and liabilities, net of effects from  

 

  purchases of businesses:  

 
 
 
 
 
 

  Amounts receivable  

 
 
 

  3,741  

 
 
 

  (11,994)  

 
 

  Inventory  

 
 
 

  173,189  

 
 
 

  23,107  

 
 

  Prepaid expenses and other assets  

 
 
 

  24,472  

 
 
 

  77  

 
 

  Accounts payable and accrued liabilities  

 
 
 

  (35,844)  

 
 
 

  16,542  

 
 

  Other, including non-cash foreign currency  

 
 
 

  (10,189)  

 
 
 

  (89,843)  

 
 

  Net cash used in operating activities  

 
 
 

  (545,811)  

 
 
 

  (465,729)  

 
 

   Cash flows from investing activities:   

 
 
 
 
 
 

  Purchases of and deposits on property, plant and equipment  

 
 
 

  (36,684)  

 
 
 

  (164,502)  

 
 

  Purchases of intangible assets  

 
 
 

  (11,429)  

 
 
 

  (9,639)  

 
 

  Proceeds on sale of property, plant and equipment  

 
 
 

  27,279  

 
 
 

  45,921  

 
 

  Proceeds on sale of intangible assets  

 
 
 

  -  

 
 
 

  18,337  

 
 

  Redemption (purchases) of short-term investments  

 
 
 

  545,991  

 
 
 

  (459,834)  

 
 

  Cash outflow on completion of RIV Arrangement  

 
 
 

  -  

 
 
 

  (152,801)  

 
 

  Net cash proceeds on sale of subsidiaries  

 
 
 

  118,149  

 
 
 

  -  

 
 

  Sale of equity method investments  

 
 
 

  -  

 
 
 

  7,000  

 
 

  Investment in other financial assets  

 
 
 

  (379,414)  

 
 
 

  (44,721)  

 
 

  Investment in Acreage Arrangement  

 
 
 

  -  

 
 
 

  (49,849)  

 
 

  Loan advanced to Acreage Hempco  

 
 
 

  -  

 
 
 

  (66,995)  

 
 

  Net cash outflow on acquisition of subsidiaries  

 
 
 

  (14,947)  

 
 
 

  -  

 
 

  Other investing activities  

 
 
 

  (18,126)  

 
 
 

  (7,022)  

 
 

  Net cash provided by (used in) investing activities  

 
 
 

  230,819  

 
 
 

  (884,105)  

 
 

   Cash flows from financing activities:   

 
 
 
 
 
 

  Proceeds from issuance of common shares and warrants  

 
 
 

  2,700  

 
 
 

  -  

 
 

  Proceeds from exercise of stock options  

 
 
 

  5,567  

 
 
 

  156,897  

 
 

  Proceeds from exercise of warrants  

 
 
 

  -  

 
 
 

  245,186  

 
 

  Issuance of long-term debt  

 
 
 

  -  

 
 
 

  893,160  

 
 

  Repayment of long-term debt  

 
 
 

  (50,763)  

 
 
 

  (15,619)  

 
 

  Other financing activities  

 
 
 

  (3,037)  

 
 
 

  (14,855)  

 
 

  Net cash (used in) provided by financing activities  

 
 
 

  (45,533)  

 
 
 

  1,264,769  

 
 

  Effect of exchange rate changes on cash and cash equivalents  

 
 
 

  (18,123)  

 
 
 

  (63,458)  

 
 

  Net decrease in cash and cash equivalents  

 
 
 

  (378,648)  

 
 
 

  (148,523)  

 
 

  Cash and cash equivalents, beginning of period  

 
 
 

  1,154,653  

 
 
 

  1,303,176  

 
 

  Cash and cash equivalents, end of period  

 
 
 

  $776,005  

 
 
 

  $1,154,653  

 
 
 

  Schedule 4  

 

  Adjusted Gross Margin 1 Reconciliation (Non-GAAP Measure)  

 
 
                                                     
 
 
 

  Three months ended March 31,  

 
 

   (in thousands of Canadian dollars except where indicated; unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Net revenue  

 
 
 

  $111,770  

 
 
 

  $148,439  

 
 
 
 
 
 
 

  Gross margin, as reported  

 
 
 

  (159,242)  

 
 
 

  9,800  

 
 

  Adjustments to gross margin:  

 
 
 
 
 
 

  Restructuring costs recorded in cost of good sold  

 
 
 

  119,115  

 
 
 

  10,348  

 
 

  Charges related to the flow-through of inventory  

 

  step-up on business combinations  

 
 
 

  4,163  

 
 
 

  -  

 
 

  Adjusted gross margin 1  

 
 
 

  $(35,964)  

 
 
 

  $20,148  

 
 
 
 
 
 
 

  Adjusted gross margin percentage 1  

 
 
 

  (32%)  

 
 
 

  14%  

 
 
 

 

 
 
                                                      
 
 
 

  Years ended March 31,  

 
 

   (in thousands of Canadian dollars except where indicated; unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Net revenue  

 
 
 

  $520,325  

 
 
 

  $546,649  

 
 
 
 
 
 
 

  Gross margin, as reported  

 
 
 

  (193,054)  

 
 
 

  66,960  

 
 

  Adjustments to gross margin:  

 
 
 
 
 
 

  Restructuring costs recorded in cost of good sold  

 
 
 

  123,669  

 
 
 

  25,985  

 
 

  Charges related to the flow-through of inventory  

 

  step-up on business combinations  

 
 
 

  11,847  

 
 
 

  1,494  

 
 

  Adjusted gross margin 1  

 
 
 

  $(57,538)  

 
 
 

  $94,439  

 
 
 
 
 
 
 

  Adjusted gross margin percentage 1  

 
 
 

  (11%)  

 
 
 

  17%  

 
 

   1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures".  

 
 
 

  Schedule 5  

 

  Adjusted EBITDA 1 Reconciliation (Non-GAAP Measure)  

 
 
                                                                    
 
 
 

  Three months ended March 31,  

 
 

   (in thousands of Canadian dollars, unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Net loss  

 
 
 

  $(578,613)  

 
 
 

  $(616,695)  

 
 

  Income tax (recovery) expense  

 
 
 

  (8,458)  

 
 
 

  4,945  

 
 

  Other (income) expense, net  

 
 
 

  57,428  

 
 
 

  366,770  

 
 

  Loss on equity method investments  

 
 
 

  -  

 
 
 

  11,778  

 
 

  Share-based compensation 2  

 
 
 

  11,669  

 
 
 

  18,517  

 
 

  Acquisition-related costs  

 
 
 

  1,272  

 
 
 

  5,561  

 
 

  Depreciation and amortization 2  

 
 
 

  30,489  

 
 
 

  28,928  

 
 

  Asset impairment and restructuring costs  

 
 
 

  241,141  

 
 
 

  74,819  

 
 

  Expected credit losses on financial assets  

 

  and related charges  

 
 
 

  -  

 
 
 

  1,000  

 
 

  Restructuring costs recorded in cost of goods sold  

 
 
 

  119,115  

 
 
 

  10,348  

 
 

  Charges related to the flow-through of inventory  

 

  step-up on business combinations  

 
 
 

  4,163  

 
 
 

  -  

 
 

  Adjusted EBITDA 1  

 
 
 

  $(121,794)  

 
 
 

  $(94,029)  

 
 
 

 

 
 
                                                                          
 
 
 

  Years ended March 31,  

 
 

   (in thousands of Canadian dollars, unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Net loss  

 
 
 

  $(320,485)  

 
 
 

  $(1,670,820)  

 
 

  Income tax recovery  

 
 
 

  (8,948)  

 
 
 

  (13,141)  

 
 

  Other (income) expense, net  

 
 
 

  (753,341)  

 
 
 

  387,876  

 
 

  Loss on equity method investments  

 
 
 

  100  

 
 
 

  52,629  

 
 

  Share-based compensation 2  

 
 
 

  47,525  

 
 
 

  91,149  

 
 

  Acquisition-related costs  

 
 
 

  11,060  

 
 
 

  13,522  

 
 

  Depreciation and amortization 2  

 
 
 

  114,418  

 
 
 

  127,118  

 
 

  Asset impairment and restructuring costs  

 
 
 

  358,708  

 
 
 

  534,398  

 
 

  Expected credit losses on financial assets  

 

  and related charges  

 
 
 

  -  

 
 
 

  109,480  

 
 

  Restructuring costs recorded in cost of goods sold  

 
 
 

  123,669  

 
 
 

  25,985  

 
 

  Charges related to the flow-through of inventory  

 

  step-up on business combinations  

 
 
 

  11,847  

 
 
 

  1,494  

 
 

  Adjusted EBITDA 1  

 
 
 

  $(415,447)  

 
 
 

  $(340,310)  

 
 

   1 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures".  

 
 

   2 From Consolidated Statements of Cash Flows.  

 
 
 
 
 
 
 

  Schedule 6  

 

  Free Cash Flow Reconciliation 1 (Non-GAAP Measure)  

 
 
                       
 
 
 

  Three months ended March 31,  

 
 

   (in thousands of Canadian dollars, unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Net cash used in operating activities  

 
 
 

  $(126,686)  

 
 
 

  $(97,830)  

 
 

  Purchases of and deposits on property, plant and equipment  

 
 
 

  (64)  

 
 
 

  (26,525)  

 
 

  Free cash flow   1

 
 
 

  $(126,750)  

 
 
 

  $(124,355)  

 
 
 

 

 
 
                        
 
 
 

  Years ended March 31,  

 
 

   (in thousands of Canadian dollars, unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Net cash used in operating activities  

 
 
 

  $(545,811)  

 
 
 

  $(465,729)  

 
 

  Purchases of and deposits on property, plant and equipment  

 
 
 

  (36,684)  

 
 
 

  (164,502)  

 
 

  Free cash flow   1

 
 
 

  $(582,495)  

 
 
 

  $(630,231)  

 
 

   1 Free cash flow is a non-GAAP measure. See "Non-GAAP Measures".  

 
 
 

  Schedule 7  

 

  Segmented Gross Margin Reconciliation  

 
 
                                                               
 
 
 

  Three months ended March 31,  

 
 

   (in thousands of Canadian dollars, unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Global cannabis segment  

 
 
 
 
 
 

  Net revenue  

 
 
 

  $65,975  

 
 
 

  $101,276  

 
 

  Cost of goods sold  

 
 
 

  236,778  

 
 
 

  106,830  

 
 

  Gross margin  

 
 
 

  (170,803)  

 
 
 

  (5,554)  

 
 

  Gross margin percentage  

 
 
 

  (259%)  

 
 
 

  (5%)  

 
 
 
 
 
 
 

  Other consumer products segment  

 
 
 
 
 
 

  Revenue  

 
 
 

  $45,795  

 
 
 

  $47,163  

 
 

  Cost of goods sold  

 
 
 

  34,234  

 
 
 

  31,809  

 
 

  Gross margin  

 
 
 

  11,561  

 
 
 

  15,354  

 
 

  Gross margin percentage  

 
 
 

  25%  

 
 
 

  33%  

 
 
 

 

 
 
                                                               
 
 
 

  Years ended March 31,  

 
 

   (in thousands of Canadian dollars, unaudited)   

 
 
 

  2022  

 
 
 

  2021  

 
 

  Global cannabis segment  

 
 
 
 
 
 

  Net revenue  

 
 
 

  $337,216  

 
 
 

  $378,680  

 
 

  Cost of goods sold  

 
 
 

  588,451  

 
 
 

  371,635  

 
 

  Gross margin  

 
 
 

  (251,235)  

 
 
 

  7,045  

 
 

  Gross margin percentage  

 
 
 

  (75%)  

 
 
 

  2%  

 
 
 
 
 
 
 

  Other consumer products segment  

 
 
 
 
 
 

  Revenue  

 
 
 

  $183,109  

 
 
 

  $167,969  

 
 

  Cost of goods sold  

 
 
 

  124,928  

 
 
 

  108,054  

 
 

  Gross margin  

 
 
 

  58,181  

 
 
 

  59,915  

 
 

  Gross margin percentage  

 
 
 

  32%  

 
 
 

  36%  

 
 
 

  Schedule 8  

 

  Segmented Adjusted Gross Margin 1 Reconciliation (Non-GAAP Measure)  

 
 
                                                                                                       
 
 
 

  Three months ended March 31,  

 
 

   (in thousands of Canadian dollars except where indicated; unaudited)   

 
 

  2022  

 
 
 

  2021  

 
 

   Global cannabis segment   

 
 
 
 
 
 

  Net revenue  

 
 
 

  $65,975  

 
 
 

  $101,276  

 
 
 
 
 
 
 

  Gross margin, as reported  

 
 
 

  (170,803)  

 
 
 

  (5,554)  

 
 

  Adjustments to gross margin:  

 
 
 
 
 
 

  Restructuring costs recorded in cost of good sold  

 
 
 

  119,115  

 
 
 

  10,348  

 
 

  Charges related to the flow-through of inventory  

 

  step-up on business combinations  

 
 
 

  4,163  

 
 
 

  -  

 
 

  Adjusted gross margin   1

 
 
 

  $(47,525)  

 
 
 

  $4,794  

 
 
 
 
 
 
 

  Adjusted gross margin percentage   1

 
 
 

  (72%)  

 
 
 

  5%  

 
 
 
 
 
 
 

   Other consumer products segment   

 
 
 
 
 
 

  Revenue  

 
 
 

  $45,795  

 
 
 

  $47,163  

 
 
 
 
 
 
 

  Gross margin, as reported  

 
 
 

  11,561  

 
 
 

  15,354  

 
 
 
 
 
 
 

  Adjusted gross margin   1

 
 
 

  $11,561  

 
 
 

  $15,354  

 
 
 
 
 
 
 

  Adjusted gross margin percentage   1

 
 
 

  25%  

 
 
 

  33%  

 
 

   1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures".  

 
 
 

 

 
 
                                                                                                            
 
 
 

  Years ended March 31,  

 
 

   (in thousands of Canadian dollars except where indicated; unaudited)   

 
 

  2022  

 
 
 

  2021  

 
 

   Global cannabis segment   

 
 
 
 
 
 

  Net revenue  

 
 
 

  $337,216  

 
 
 

  $378,680  

 
 
 
 
 
 
 

  Gross margin, as reported  

 
 
 

  (251,235)  

 
 
 

  7,045  

 
 

  Adjustments to gross margin:  

 
 
 
 
 
 

  Restructuring costs recorded in cost of good sold  

 
 
 

  123,669  

 
 
 

  25,985  

 
 

  Charges related to the flow-through of inventory  

 

  step-up on business combinations  

 
 
 

  11,847  

 
 
 

  -  

 
 

  Adjusted gross margin   1

 
 
 

  $(115,719)  

 
 
 

  $33,030  

 
 
 
 
 
 
 

  Adjusted gross margin percentage   1

 
 
 

  (34%)  

 
 
 

  9%  

 
 
 
 
 
 
 

   Other consumer products segment   

 
 
 
 
 
 

  Revenue  

 
 
 

  $183,109  

 
 
 

  $167,969  

 
 
 
 
 
 
 

  Gross margin, as reported  

 
 
 

  58,181  

 
 
 

  59,915  

 
 

  Adjustments to gross margin:  

 
 
 
 
 
 

  Charges related to the flow-through of inventory  

 

  step-up on business combinations  

 
 
 

  -  

 
 
 

  1,494  

 
 

  Adjusted gross margin   1

 
 
 

  $58,181  

 
 
 

  $61,409  

 
 
 
 
 
 
 

  Adjusted gross margin percentage   1

 
 
 

  32%  

 
 
 

  37%  

 
 

   1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See "Non-GAAP Measures".  

 
 
 
 
 

 Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/canopy-growth-corporation-reports-fourth-quarter-and-fiscal-year-2022-financial-results-301556496.html  

 

SOURCE Canopy Growth Corporation

 

 

 

 Cision View original content to download multimedia: https://www.newswire.ca/en/releases/archive/May2022/27/c5467.html  

 
 

News Provided by Canada Newswire via QuoteMedia

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The Conversation (0)
Closeup of lush green cannabis leaves.

Thailand Reverses Course on Cannabis, Moves to Recriminalize Amid Political Fallout

Thailand’s groundbreaking experiment with cannabis decriminalization is rapidly unraveling, with the government formally moving to reclassify the plant as a narcotic and ban recreational sales.

The decision has sent shockwaves through an industry once projected to be worth over US$1 billion.

The country’s Ministry of Public Health issued an order this week stating that cannabis only be sold with a medical prescription, effectively ending a short-lived era of liberal recreational access.

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Cannabis leaf over map of Australia.

A State-by-State Guide to Cannabis in Australia

Australia federally legalised medicinal cannabis in 2016, and Australia's cannabis market has seen major growth since then.

Medical cannabis approvals were up by 120 percent in the first half of 2023 compared to the same period in 2022. Statista forecasts that Australian cannabis revenue will reach AU$3.73 billion in 2024 and grow at an annual rate of 3.22 percent, culminating in market volume worth AU$4.53 billion by 2029.

However, Australia’s cannabis industry is still young. Despite there being a strong case for a regulated market, which was outlined in a July 2024 report by the Penington Institute, recreational use is not legal and medical access remains limited and regulated.

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Cannabis leaf on road marked with "2025," with sunlight in the background.

New Cannabis Consumption Trends, Regulatory Shifts Seen Driving Market in 2025

Understanding trends in the cannabis industry is paramount for investors eyeing a market with steady growth potential, but the landscape is complex as products and regulations continue to evolve.

Consumption habits are changing as edibles, vaping and THC beverages gain traction, especially among younger users, and cannabis companies are adapting their offerings to meet shifting demand.

Meanwhile, regulatory uncertainty, particularly surrounding the future of the US Farm Bill and state-level restrictions on hemp-derived cannabinoids, continues to challenge the market.

Despite these headwinds, production data and long-term growth forecasts suggest the cannabis industry remains on a promising — albeit turbulent — path. Read on for more on key trends to watch in 2025.

Consumption methods evolving post-legalization

Shifts in consumer behavior are reshaping markets across the board, and the cannabis industry is no exception.

While smoking remains the dominant method of cannabis consumption, a recent report from the Centers for Disease Control and Prevention highlights the growing popularity of edibles, vaping and dabbing.

The report notes that vaping and dabbing are particularly pronounced among younger adults.

A separate study published by the American Medical Association and funded in part by the Canadian Institutes of Health Research also points to how product preferences have changed among Canadian users since legalization in 2018.


The study indicates that while the use of flower, cannabis concentrates, oil, tinctures and topicals has decreased during that time, the use of vape cartridges, edibles and beverages has increased.

Edibles and beverages were legalized in Canada in late 2019, and Truss Beverage was one of the first players to introduce cannabis-infused drinks. Truss was a joint venture formed by Molson Coors Canada (TSX:TPX.A,TSX:TPX.B) and HEXO, a cannabis company that has since been acquired by Tilray Brands (TSX:TLRY,NASDAQ:TLRY).

In early 2020, Tilray launched a lineup of confectionery, wellness products and beverages through its subsidiary, High Park; Canopy Growth (TSX:WEED,NASDAQ:CGC) made a similar move. These companies gradually brought their products to the US as more states legalized cannabis for medical and/or recreational use.

Today, established cannabis brands typically offer edibles and beverages alongside their other products. Organigram Global (TSX:OGI,NASDAQ:OGI) is one of the newest US entrants, with its April acquisition of Collective Project providing immediate access to the US hemp-derived THC beverage market.

Growing awareness of health and wellness, potentially amplified by the pandemic-led adoption of health trackers, appears to be making an impact on the alcoholic beverage market.

A 2023 Gallup poll reveals a two decade decline in alcohol consumption, particularly among younger adults, suggesting a shift towards more health-conscious lifestyles within this demographic.

Craft beer production declined by 4 percent year-on-year in 2024, according to data collected by the Brewers Association. This marked the largest drop in the industry's history, excluding the pandemic. For small, independent craft breweries, 2024 marked the third consecutive year of declining production. A drop in the number of operating small breweries last year provides further evidence of this trend, with 501 closures in 2024 versus 434 openings.

Challenges in the alcohol market extend beyond the brewing industry, with the New York Times recently reporting the closure of a handful of nightclubs facing decreased alcohol sales alongside rising insurance and rent costs.

Meanwhile, cannabis lounges have been popping up across the US for the last several years. As of early 2025, several states had legalized or were in the process of implementing regulations for cannabis consumption lounges.

Hemp market growth despite regulatory uncertainty

The burgeoning hemp industry is another segment of the expanding cannabis market.

The legalization of industrial hemp — defined as cannabis with a THC concentration of 0.3 percent or less — through the 2018 Farm Bill led to initial investment and optimistic projections for CBD wellness products and various industrial applications. The sector’s rapid evolution also brought the rise of hemp-derived intoxicating cannabinoids, creating a market that presented both opportunities and complexities for participants.

However, after an initial boom, a lack of infrastructure and clearly defined regulations for CBD, as well as state-level variations and market oversupply, ultimately contributed to a quick retraction.

2024 was a pivotal year for the US hemp industry, as the hemp-related provisions of the 2018 Farm Bill — originally set to expire in September 2023, but extended to December 31, 2024 — created an urgent need to address critical issues like THC limits and the regulation of novel hemp-derived cannabinoids. A major point of contention was the proposed shift from defining hemp based on Delta-9 THC concentration (0.3 percent or less) to “total THC,” which includes THCA.

This change had the potential to significantly impact farmers and processors, as many hemp varieties that are compliant under the Delta-9 THC rule could exceed the 0.3 percent limit when THCA is included.

Various bills and amendments were proposed in 2024 as part of the Farm Bill discussions, each with different approaches to regulating hemp. Separate regulatory frameworks for industrial hemp and hemp grown for cannabinoids were suggested, and many states took their own action, leading to a patchwork of regulations and even outright bans.

Despite challenges, data from the US Department of Agriculture suggests signs of recovery.

The department's annual National Hemp Report from 2024 points to an 18 percent increase in industrial hemp production value between 2022 and 2023, with output growth seen in specific sectors like floral (18 percent), fiber (133 percent) and seed hemp (414 percent). The 2025 report from the Department of Agriculture indicates further expansion, with notable increases observed in both acreage (up 64 percent from 2023) and value (46 percent).

The 2024 Farm Bill ultimately did not pass, and right now the hemp industry is operating under a temporary extension of the 2018 Farm Bill under the American Relief Act of 2025, signed into law on December 21, 2024.

The 2018 Farm Bill is now set to expire on September 30, 2025.

While analysts for Markets and Markets project that the North American hemp industry will grow at a CAGR of 22.4 percent and ultimately reach a valuation of US$30.24 billion by 2029, the future of the industry will be heavily influenced by the outcome of the ongoing Farm Bill discussions.

US cannabis legalization remains stalled

Although there is clear demand for cannabis products, the now-defunct rescheduling process in the US is likely to continue casting a shadow of uncertainty over the industry's long-term trajectory.

Legal and procedural delays, including allegations of improper conduct and bias within the US Drug Enforcement Administration (DEA), led to hearing cancellations, and the new administration of US President Donald Trump has brought leadership changes to key agencies like the DEA and the Department of Justice.

Terry Cole, who Trump nominated to be DEA administrator on February 11, has a history of opposing cannabis legalization in the country. Similarly, Pam Bondi, Trump’s pick to lead the justice department, staunchly opposed a movement to legalize medical cannabis during her tenure as Florida’s attorney general.

While there have been bipartisan efforts in Congress to end federal cannabis prohibition and establish regulations for eventual legalization, the DEA’s actions and statements indicate a potential stall or reversal of progress.

In addition to that, new research is adding complexity to the debate.

A study published in the American Journal of Psychiatry this past March highlights an association between the use of high-potency cannabis strains and increased risks of psychosis, a factor that may not have been fully considered by the Department of Health and Human Services. As stronger cannabis strains become more widely available, a reassessment of their potential health risks may be required.

Investor takeaway

While the cannabis industry holds promise for growth and innovation, investors must remain acutely aware of the regulatory uncertainties and market volatility that will undoubtedly shape its trajectory in the years to come.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

Person touching a cannabis plant; Australia map in flag colours.

ASX Cannabis Stocks: 10 Biggest Companies

While Australia has yet to legalise all forms of cannabis, the country is a growing medical cannabis and hemp market, with many companies manufacturing, researching and exporting the plant-based product.

Medical cannabis was federally legalised in 2016, and the export of cannabis from Australia was legalised in 2018. As for recreational use, the only state to legalise recreational use and possession so far is the Australian Capital Territory, which did so in 2020, but it did not establish a regulated recreational cannabis market.

The country's medical cannabis market has been steadily expanding in size and scope. A Penington Institute report shows that Australians spent approximately AU$400 million on medicinal cannabis in the first half of 2024, 72 percent higher than the AU$234 million they spent over the entirety of 2022.

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Cannabis leaves, gavel.

Cannabis Round-Up: Rescheduling Faces New Roadblocks, SAFER Banking Act Gets Another Look

February 2025 was characterized by an evolving legislative landscape and important financial updates from major players.

These developments underscore the complex and dynamic nature of the sector as it continues to navigate legal, financial, and regulatory challenges while experiencing ongoing growth and evolution.

Discussions around cannabis rescheduling, changes in federal agency leadership, state-level legalization efforts, and financial reports from key companies all contributed to a month of notable activity in the cannabis space.

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Cannabis leaves, US flag.

Cannabis Round-Up: Banking Reform and Rescheduling De-Prioritized as Trump Takes Office

As a new year began, the cannabis industry saw a range of impactful events in January.

Legal obstacles continued to impede progress on a once-promising attempt to reschedule cannabis in the US, and President Donald Trump's leadership choices for key agencies are diminishing hopes it can be accomplished.

Meanwhile, cannabis banking reform won't be discussed at Wednesday's (February 5) meeting of the Standing Senate Committee on Banking, Commerce and the Economy, and Congress seems in no rush to address it.

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