Canopy Growth Reports Second Quarter Fiscal 2022 Financial Results

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Ā 

Canopy Growth Corporation ("Canopy Growth" or theĀ  ("Company") (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the second quarter fiscal 2022 ended September 30, 2021 . All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

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Ā 

Ā Ā Canopy Growth Reports Second Quarter Fiscal 2022 Financial Results (CNW Group/Canopy Growth Corporation)Ā 

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Ā 

Ā  H Ā  i Ā  g Ā  h Ā  li Ā  g Ā  h Ā  t Ā  s Ā 

Ā 
  • Announced plan to acquire the #1 edibles company in North America , Wana Brands , upon U.S. THC permissibility further strengthening U.S. ecosystem.

  • Ā 
  • Delivered a robust innovative new product pipeline with over 40+ new SKUs launching globally during Q2 FY2022.

  • Ā 
  • Launched whisl, an innovative CBD vape designed for mood management, through an exclusive partnership with Circle K in the U.S.

  • Ā 
  • Net revenue declined by 3% in Q2 FY2022 versus Q2 FY2021. Maintained market leadership position in premium flower category and increased market share in vapes and edibles during Q2Ā FY2022 across tracked Canadian recreational cannabis market.

  • Ā 
  • Pushing out positive Adjusted EBITDA target due to Canada supply challenges and a delayed revenue ramp in the U.S.; taking a number of actions to improve Canadian performance and remain optimistic about the mid-to long-term outlook.
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"In new industries where the potential is immense, progress is rarely a straight line. With a focused strategy, aĀ foundation for growth, and our burgeoning U.S. ecosystem, Canopy is uniquely positioned to win as the industry matures."

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Ā Ā  David Klein , Chief Executive Officer, Canopy Growth Corporation Ā 

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"Achieving profitability remainsĀ a top priority. We are focused on increasing market share in Canada , premiumizing our product mix and delivering on our cost savings commitment."

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Ā Ā  Mike Lee , Chief Financial Officer, Ā  Canopy Growth Corporation Ā 

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Ā  Second Ā Ā Ā  Q Ā  u Ā  ar Ā  te Ā  rĀ FiscalĀ 2022Ā FinancialĀ Summary Ā 

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Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
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Ā  (inĀ millionsĀ ofĀ Canadian
Ā  \dollars, unaudited) Ā 

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Ā 

Ā Ā  Net Ā Ā Ā  Revenue Ā Ā 

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Ā 

Ā Ā  Gross Ā Ā Ā  margin Ā Ā 

Ā 

Ā Ā  percentage Ā Ā 

Ā 
Ā 

Ā Ā  Adjusted Ā Ā 

Ā 

Ā Ā  gross Ā Ā Ā  margin Ā Ā 

Ā 

Ā Ā  percentage 1 Ā Ā 

Ā 
Ā 

Ā Ā  Net Ā Ā Ā  loss Ā Ā 

Ā 
Ā 

Ā Ā  Adjusted Ā Ā 

Ā 

Ā Ā  EBITDA 2 Ā Ā 

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Ā 

Ā Ā  Free Ā Ā Ā  cash Ā Ā 

Ā 

Ā Ā  flow 3 Ā Ā 

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Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  Reported Ā Ā 

Ā 
Ā 

Ā  $131.4 Ā 

Ā 
Ā 

Ā  (54%) Ā 

Ā 
Ā 

Ā  (52%) Ā 

Ā 
Ā 

Ā  $(16.3) Ā 

Ā 
Ā 

Ā  $(162.6) Ā 

Ā 
Ā 

Ā  $(101.3) Ā 

Ā 
Ā 

Ā  vs. Q2 FY2021 Ā 

Ā 
Ā 

Ā  (3%) Ā 

Ā 
Ā 

Ā  (7,300) bps Ā 

Ā 
Ā 

Ā  (7,100) bps Ā 

Ā 
Ā 

Ā  83% Ā 

Ā 
Ā 

Ā  (90%) Ā 

Ā 
Ā 

Ā  47% Ā 

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Ā 
Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā 
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Ā  _____________________________ Ā 

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Ā Ā  1 Ā 

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Ā  Adjusted gross margin is a non-GAAP measure, and for Q2 fiscal 2022 excludes $3.1 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis (Q2 FY2021 - excludes $0.3 million related to the flow-through of inventory step-up associated with fiscal 2020 business combinations). See "Non-GAAP Measures". Ā 

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Ā 

Ā Ā  2 Ā 

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Ā 

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

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Ā 

Ā Ā  3 Ā 

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Ā 

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

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Ā 

Ā  SecondĀ QuarterĀ FiscalĀ 2022Ā FinancialĀ Summary Ā 

Ā 

Ā  R Ā  e Ā  v Ā  e Ā  nu Ā  e Ā  s Ā  : Ā 

Ā 

Net revenue of $131 million in Q2 FY2022 was a decline of 3% versus Q2 FY2021. Total net cannabis revenue of $95 million in Q2 FY2022, represented an increase of 1% over Q2 FY2021. Excluding the impact from acquired businesses, net revenue declined 13% and cannabis revenue declined 14% versus Q2 FY2021.

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Ā  G Ā  r Ā  o Ā  s Ā  sĀ margin: Ā 

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Reported gross margin in Q2 FY2022 was (54%) as compared to 19% in Q2 FY2021. Excluding non-cash charges related to inventory write-downs and inventory step-up charges from acquisitions, as well as certain other non-recurring items including Canadian government payroll subsidies pursuant to a COVID-19 relief program, gross margin would have been approximately 12%.Ā  Inventory write-downs in Q2 FY22 amounted to $87 million and primarily relate to excess Canadian cannabis inventory resulting from lower sales relative to forecast as well as declines in expected near-term demand. Gross margin in Q2 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 .

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Ā  O Ā  p Ā  e Ā  rat Ā  in Ā  gĀ expenses: Ā 

Ā 

Total SG&A ("SG&A") expenses in Q2 FY2022 declined by 15% versus Q2 FY2021, driven by year-over-year reductions in General & Administrative ("G&A") and Research and Development ("R&D") expenses partially offset by an increase in Sales & Marketing ("S&M") expenses. G&A expenses declined 49% year-over-year primarily due to reductions in staffing and professional fees and benefit from payroll subsidies received from the Canadian government in Q2 FY2022, pursuant to a COVID-19 relief program. R&D expenses declined 38% year-over-year principally due to project timing. S&M expenses increased 49% year-over-year primarily due a return to more normal advertising and promotions spending in Q2 FY2022, compared to the prior year, higher sponsorship fees associated with BioSteel's partnership deals and increased advertising expenses associated with new product launches.

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Ā  N Ā  e Ā  tĀ Earnings: Ā 

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Net EarningsĀ in Q2 FY2022Ā amounted to a loss of $16Ā million,Ā whichĀ is anĀ $80Ā million improvementĀ versus Q2 FY2021,Ā drivenĀ primarilyĀ byĀ Other IncomeĀ totalingĀ $196Ā millionĀ duringĀ Q2Ā FY2022Ā mostly attributableĀ toĀ non-cashĀ fairĀ valueĀ changesĀ ofĀ $233Ā million.

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Ā  AdjustedĀ EBITDA: Ā 

Ā 

AdjustedĀ EBITDAĀ lossĀ in Q2 FY2022Ā was $163Ā million,Ā a $77Ā millionĀ wider loss versus Q2 FY2021 driven by lower sales, a decline in gross margins, partially offset by the reduction in our total selling, general and administrative expense. Adjusted EBITDA loss in Q2 FY2022, excluding non-cash inventory write-downs would have been a loss of $76 million .

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Ā  F Ā  r Ā  e Ā  eĀ CashĀ Flow: Ā 

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Free CashĀ FlowĀ in Q2 FY2022Ā wasĀ anĀ outflowĀ ofĀ $101Ā million,Ā a 47%Ā decreaseĀ in outflowĀ vsĀ Q2 FY2021.Ā RelativeĀ toĀ Q2Ā FY2021,Ā the FreeĀ CashĀ Flow outflow reduction reflects the decrease in cash used for operating activities and the lower purchases of property, plant and equipment.

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Ā  C Ā  as Ā  hĀ Position: Ā 

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CashĀ andĀ Short-termĀ InvestmentsĀ amountedĀ toĀ $2.0 billionĀ at September 30 , 2021,Ā representingĀ aĀ decrease ofĀ $0.3Ā billionĀ from $2 .3Ā billionĀ at March 31 , 2021Ā reflectingĀ EBITDAĀ lossesĀ andĀ capitalĀ investments.

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Ā  Outlook Ā 

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Ā  Pushing out positive Adjusted EBITDA target due to market share challenges in the Canadian recreational business and a slower-than-expected ramp-up of U.S. distribution for BioSteel Ā 

Ā 
  • The Company continues to expect revenue acceleration in the second half of FY2022 but the magnitude and pace of improvement is expected to be more modest than previously anticipated. The Company is focused on stabilizing its market share of the Canadian recreational cannabis in the second half of FY2022. Distribution expansion of BioSteel is expected to accelerate in the second half of FY2022 but shipments may depend on timing of chain authorizations and associated shelf resets.

  • Ā 
  • The Company is taking steps to improve its Canadian recreational business, with increased supply of in-demand high THC flower products and new product launches across flower, pre-roll joints, vapes, edibles and beverages expected to improve market share. Additionally, the Company recently implemented a portfolio optimization strategy that is designed to improve distribution of high-velocity and high-margin products while reducing supply chain complexity and improving service levels on priority SKUs. The portfolio optimization work, along with increased sales, is expected to lead to improved gross margin in the Canadian operations.

  • Ā 
  • The Company remains optimistic about its growth opportunities in the U.S. for both its BioSteel ready-to-drink ("RTD") beverages and its portfolio of CBD brands. Brand awareness continues to rise, velocity is tracking in-line with expectations and feedback from distributors and retailers has been positive. BioSteel is expected to see its distribution ramp up over the balance of FY2022 and into FY2023 driven by increased listings with national and regional chain accounts.

  • Ā 
  • ImplementationĀ ofĀ the previously announced cost savings programĀ isĀ wellĀ underway,Ā withĀ theĀ Company havingĀ realizedĀ $70Ā million,Ā includingĀ $32Ā millionĀ inĀ Q2Ā FY2022,Ā ofĀ theĀ $150 millionĀ toĀ $200Ā millionĀ inĀ costĀ savingsĀ expectedĀ byĀ theĀ endĀ ofĀ theĀ first halfĀ of FY2023. The Company is taking steps to reduce/delay discretionary spending and further tighten G&A expenses, an effort that is also expected to contribute to the Company achieving positive adjusted EBITDA.

  • Ā 
  • Further mitigating impact to Free Cash Flow through a reduced CapEx plan, with FY2022 CapEx now expected to be in the range of $100 million to $150 million .
  • Ā 

Ā  Second Ā  Q Ā  u Ā  ar Ā  te Ā  rĀ FiscalĀ 2022Ā BusinessĀ Highlights Ā 

Ā 

Ā  Amid a highly competitive Canadian recreational market, increased market share in vapes and edibles and maintained market leadership in premium flower category Ā 

Ā 
  • In Q2 FY2022, increased vape market share by 20 bps to 8.5% 4 and increased edibles market share by 50 bps to 8.7%, from Q1 FY2022.

  • Ā 
  • Maintained #1 market share in premium flower category in Q2 FY2022 with 13.2%, down 310 bps quarter over quarter, #2 market share in the value flower category in Q2 FY2022 with 18.1%, down 540 bps sequentially.

  • Ā 
  • Market share softness across flower categories was driven by insufficient supply of flower with in-demand attributes, including higher THC, in the premium and mainstream categories as well heightened competition focused on single strain offerings in the value flower category.

  • Ā 
  • Flower products with in-demand attributes, including higher THC, have begun coming to market, with supply expected to build over 2H FY2022.
  • Ā 
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Ā Ā Ā 
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Ā  ____________________ Ā 

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Ā Ā 
4
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Ā  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 26% 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. Ā 

Ā 
Ā 
Ā 

Ā  U.S. business continues to gain momentum, distribution expected to ramp into spring CY2022 Ā 

Ā 
  • BioSteel RTD beverages continued to build distribution throughout Q2 FY2022, with All Commodity Volume ("ACV") increasing to 6.5% in the latest 13-weeks ending October 3, 2021 in IRI. BioSteel has recently secured new distribution with a number of key retailers, and active discussions underway with additional national and regional chain retailers.

  • Ā 
  • Martha Stewart CBD remains one of the fastest growing CBD brand across all formats and is now the #3 brand among all CBD gummies in the food, drug and convenience-store channel with 12.4% market share, according to IRI data for the 4 weeks ended October 3, 2021 . A range of new Martha Stewart CBD confectionary products has shipped in the current quarter.

  • Ā 
  • Subsequent to quarter end, Canopy announced an agreement to acquire, upon federal permissibility of THC, Wana Brands , the #1 cannabis edibles brand in North America . Wana's leadership position and ongoing expansion across the U.S. bolsters Canopy Growth's product, brand and geographic exposure to the U.S. cannabis market upon federal permissibility.
  • Ā 

Ā  Over 40 new SKUs shipped in Q2 FY2022 including new innovative cannabis-based mood management vape Ā 

Ā 

Ā  I Ā  n Flower: Ā 

Ā 
  • Launched a range of premium flower SKUs in Q2 FY2022 including new DOJA Okanagan Grown Ultra Sour and Cold Creek Kush, as well as DOJA Craft limited time offerings including Cali Kush Cake and GMO Garlic Breath.
  • Ā 
  • Launched small format pre-rolled joints in Q2 FY2022 - Tweed Quickies, in Green Kush and Afghan Kush, and Ace Valley Pinners, in Kosher Kush, OG Mellon and Great White Shark – the first CBD dominant pre–roll in the category.
  • Ā 
  • The Company expects to bring additional flower and pre-roll products to market over the coming months including new strains across all categories with DOJA 91K , Tweed Powdered Donuts, Twd. Garlic Jelly flower shipped in the current quarter.
  • Ā 

Ā  I Ā  n Vapes: Ā 

Ā 
  • The Company launched the new nicotine-free, whisl CBD vaporizer in the U.S in Q2 FY2022. whisl brings cannabis-based mood management to vapes, offering three uniquely formulated options to help consumers dial in to their desired effect – focus, calm, or winding down. whisl is available on shopcanopy.com and in over 3,500 Circle K stores across the U.S. currently. whisl is already the #3 CBD vape in the U.S. per IRI data for the 4 weeks ended October 3, 2021 .
  • Ā 
  • Storz & Bickel released three new vaporizer updates in Q2 FY2022 including the limited-edition VOLCANO ONYX and the MIGHTY+ vaporizer featuring a fast-charging USB-C socket, pre-set Superbooster temperature and 60-second rapid heat up time.
  • Ā 
  • The Company is scheduled to ship premium 7Acres live-resin dab-friendly concentrates in the coming months.
  • Ā 

Ā  I Ā  n Beverages: Ā 

Ā 
  • TheĀ CompanyĀ further expandedĀ itsĀ beverage portfolioĀ with TweedĀ IcedĀ TeaĀ (availableĀ inĀ lemonĀ andĀ raspberryĀ flavours,Ā bothĀ withĀ 5 mgĀ THC)Ā enteringĀ the marketĀ inĀ Q1Ā FY2022Ā andĀ newĀ TweedĀ FizzĀ seltzers (availableĀ inĀ WatermelonĀ andĀ MangoĀ flavours,Ā bothĀ withĀ 5 mgĀ THC)Ā entering the market in Q2 FY2022.
  • Ā 
  • The Company has expanded the popular Deep Space brand having shipped Deep Space Limon Splashdown in the current quarter.
  • Ā 

Ā  I Ā  n Edibles: Ā 

Ā 
  • In Q2 FY2022, the Company launched Ace ValleyĀ Dream CBN gummies containing the minor cannabinoid CBN which lends itself to sleep.Ā The Company also launched Ace Valley Super CBD gummies in Q2 FY2022.
  • Ā 
  • The Company has extended the popular Deep Space brand into the edibles category with shipments of our new Deep Space XPRESS gummies beginning in Q3 FY2022. The Deep Space XPRESS gummy contains the maximum allowable 10 mg THC per gummy and are available in the original Deep Space Cola and new Limon Splashdown flavours. In addition, new Tweed XPRESS gummies will begin to ship in Q3 FY2022.
  • Ā 
  • Also in Q3 FY2022, the Company has begun shipping new Martha Stewart Harvest Medley CBD Wellness Gummies, Mini CBD Peppermint Ribbons, and the Snowflake CBD Gummy Sampler.
  • Ā 

Ā  Second Quarter Fiscal 2022 Revenue Review Ā 

Ā 

Ā  Revenue by Channel Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 
Ā 

Ā Ā  (in millions of Canadian dollars, unaudited) Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Q2 FY2022 Ā Ā 

Ā 
Ā 

Ā Ā  Q2 FY2021 Ā Ā 

Ā 
Ā 

Ā Ā  Vs. Q2 FY2021 Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Canadian recreational cannabis Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Business to business 5 Ā 

Ā 
Ā 
Ā 

Ā  $41.9 Ā 

Ā 
Ā 

Ā  $42.2 Ā 

Ā 
Ā 

Ā  (1%) Ā 

Ā 
Ā 
Ā 

Ā  Business to consumer Ā 

Ā 
Ā 
Ā 

Ā  $16.7 Ā 

Ā 
Ā 

Ā  $18.7 Ā 

Ā 
Ā 

Ā  (11%) Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  $58.6 Ā Ā 

Ā 
Ā 

Ā Ā  $60.9 Ā Ā 

Ā 
Ā 

Ā Ā  (4%) Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Canadian medical cannabis 6 Ā Ā 

Ā 
Ā 
Ā 

Ā  $13.1 Ā 

Ā 
Ā 

Ā  $13.9 Ā 

Ā 
Ā 

Ā  (6%) Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  $71.7 Ā Ā 

Ā 
Ā 

Ā Ā  $74.8 Ā Ā 

Ā 
Ā 

Ā Ā  (4%) Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  International and other Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  C 3 Ā 

Ā 
Ā 
Ā 

Ā  $11.9 Ā 

Ā 
Ā 

Ā  $13.6 Ā 

Ā 
Ā 

Ā  (13%) Ā 

Ā 
Ā 
Ā 

Ā  Other Ā 

Ā 
Ā 
Ā 

Ā  $11.7 Ā 

Ā 
Ā 

Ā  $5.9 Ā 

Ā 
Ā 

Ā  98% Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  $23.6 Ā Ā 

Ā 
Ā 

Ā Ā  $19.5 Ā Ā 

Ā 
Ā 

Ā Ā  21% Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Global cannabis net revenue Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  $95.3 Ā Ā 

Ā 
Ā 

Ā Ā  $94.3 Ā Ā 

Ā 
Ā 

Ā Ā  1% Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Other consumer products Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Storz & Bickel Ā 

Ā 
Ā 
Ā 

Ā  $14.5 Ā 

Ā 
Ā 

Ā  $21.9 Ā 

Ā 
Ā 

Ā  (34%) Ā 

Ā 
Ā 
Ā 

Ā  This Works Ā 

Ā 
Ā 
Ā 

Ā  $9.1 Ā 

Ā 
Ā 

Ā  $7.8 Ā 

Ā 
Ā 

Ā  17% Ā 

Ā 
Ā 
Ā 

Ā  Bio Steel Ā 

Ā 
Ā 
Ā 

Ā  $7.5 Ā 

Ā 
Ā 

Ā  $5.1 Ā 

Ā 
Ā 

Ā  47% Ā 

Ā 
Ā 
Ā 

Ā  Other Ā 

Ā 
Ā 
Ā 

Ā  $5.0 Ā 

Ā 
Ā 

Ā  $6.2 Ā 

Ā 
Ā 

Ā  (19%) Ā 

Ā 
Ā 
Ā 

Ā Ā  Other consumer products revenue Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  $36.1 Ā Ā 

Ā 
Ā 

Ā Ā  $41.0 Ā Ā 

Ā 
Ā 

Ā Ā  (12%) Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Net revenue Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  $131.4 Ā Ā 

Ā 
Ā 

Ā Ā  $135.3 Ā Ā 

Ā 
Ā 

Ā Ā  (3%) Ā Ā 

Ā 
Ā 
Ā 

Ā  This table has been recast to align with our new segment reporting. International and other revenue includes revenue from our international medical business and hemp-derived CBD business. Other consumer products includes revenue from Storz & Bickel, This Works, BioSteel, clinics, accessories and other ancillary businesses. Ā 

Ā 
Ā 
Ā 
Ā 
Ā Ā Ā Ā Ā 
Ā 

Ā  ______________ Ā 

Ā 
Ā 

Ā Ā  5 Ā 

Ā 
Ā 

Ā  Reflects excise taxes of $12.9 million and other revenue adjustments of $nil for Q2 2022 (Q2 2021 – $14.2 million and $3.8 million, respectively) Ā 

Ā 
Ā 

Ā Ā  6 Ā 

Ā 
Ā 

Ā  Reflects excise taxes of $1.4 million for Q2 2022 (Q2 2021 - $1.4 million). Ā 

Ā 
Ā 
Ā 

Ā  Revenue by Form Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 
Ā 

Ā Ā  (in millions of Canadian dollars, unaudited) Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Q2 FY2022 Ā Ā 

Ā 
Ā 

Ā Ā  Q2 FY2021 Ā Ā 

Ā 
Ā 

Ā Ā  Vs. Q2 FY2021 Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Canadian recreational cannabis Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Dry bud 7 Ā 

Ā 
Ā 
Ā 

Ā  $56.8 Ā 

Ā 
Ā 

Ā  $63.9 Ā 

Ā 
Ā 

Ā  (11%) Ā 

Ā 
Ā 
Ā 

Ā  Oils and softgels 7 Ā 

Ā 
Ā 
Ā 

Ā  $5.5 Ā 

Ā 
Ā 

Ā  $7.0 Ā 

Ā 
Ā 

Ā  (21%) Ā 

Ā 
Ā 
Ā 

Ā  Beverages, edibles, topicals and vapes 7 Ā 

Ā 
Ā 
Ā 

Ā  $9.2 Ā 

Ā 
Ā 

Ā  $8.0 Ā 

Ā 
Ā 

Ā  15% Ā 

Ā 
Ā 
Ā 

Ā  Other revenue adjustments 8 Ā 

Ā 
Ā 
Ā 

Ā  $- Ā 

Ā 
Ā 

Ā  $(3.8) Ā 

Ā 
Ā 

Ā  100% Ā 

Ā 
Ā 
Ā 

Ā  Excise taxes Ā 

Ā 
Ā 
Ā 

Ā  $(12.9) Ā 

Ā 
Ā 

Ā  $(14.2) Ā 

Ā 
Ā 

Ā  9% Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  $58.6 Ā Ā 

Ā 
Ā 

Ā Ā  $60.9 Ā Ā 

Ā 
Ā 

Ā Ā  (4%) Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Medical cannabis and other Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Dry bud Ā 

Ā 
Ā 
Ā 

Ā  $9.1 Ā 

Ā 
Ā 

Ā  $9.9 Ā 

Ā 
Ā 

Ā  (8%) Ā 

Ā 
Ā 
Ā 

Ā  Oils and soft gels Ā 

Ā 
Ā 
Ā 

Ā  $20.8 Ā 

Ā 
Ā 

Ā  $23.5 Ā 

Ā 
Ā 

Ā  (11%) Ā 

Ā 
Ā 
Ā 

Ā  Beverages, edibles, topicals and vapes Ā 

Ā 
Ā 
Ā 

Ā  $8.2 Ā 

Ā 
Ā 

Ā  $1.4 Ā 

Ā 
Ā 

Ā  486% Ā 

Ā 
Ā 
Ā 

Ā  Excise taxes Ā 

Ā 
Ā 
Ā 

Ā  $(1.4) Ā 

Ā 
Ā 

Ā  $(1.4) Ā 

Ā 
Ā 

Ā  0% Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  $36.7 Ā Ā 

Ā 
Ā 

Ā Ā  $33.4 Ā Ā 

Ā 
Ā 

Ā Ā  10% Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Global cannabis net revenue Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  $95.3 Ā Ā 

Ā 
Ā 

Ā Ā  $94.3 Ā Ā 

Ā 
Ā 

Ā Ā  1% Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  Other consumer products Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Storz & Bickel Ā 

Ā 
Ā 
Ā 

Ā  $14.5 Ā 

Ā 
Ā 

Ā  $21.9 Ā 

Ā 
Ā 

Ā  (34%) Ā 

Ā 
Ā 
Ā 

Ā  This Works Ā 

Ā 
Ā 
Ā 

Ā  $9.1 Ā 

Ā 
Ā 

Ā  $7.8 Ā 

Ā 
Ā 

Ā  17% Ā 

Ā 
Ā 
Ā 

Ā  Bio Steel Ā 

Ā 
Ā 
Ā 

Ā  $7.5 Ā 

Ā 
Ā 

Ā  $5.1 Ā 

Ā 
Ā 

Ā  47% Ā 

Ā 
Ā 
Ā 

Ā  Other Ā 

Ā 
Ā 
Ā 

Ā  $5.0 Ā 

Ā 
Ā 

Ā  $6.2 Ā 

Ā 
Ā 

Ā  (19%) Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  Other consumer products revenue Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  $36.1 Ā Ā 

Ā 
Ā 

Ā Ā  $41.0 Ā Ā 

Ā 
Ā 

Ā Ā  (12%) Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  Net revenue Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  $131.4 Ā Ā 

Ā 
Ā 

Ā Ā  $135.3 Ā Ā 

Ā 
Ā 

Ā Ā  (3%) Ā Ā 

Ā 
Ā 
Ā 

Ā  This table has been recast to align with our new segment reporting. Ā 

Ā 
Ā 
Ā 
Ā 
Ā Ā Ā Ā Ā 
Ā 

Ā  __________________ Ā 

Ā 
Ā 

Ā Ā  7 Ā 

Ā 
Ā 

Ā  Excludes the impact of other revenue adjustments. Ā 

Ā 
Ā 

Ā Ā  8 Ā 

Ā 
Ā 

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

Ā 
Ā 
Ā 

Ā  Second Quarter Fiscal 2022 Revenue Review Ā 

Ā 

Canadian Cannabis

Ā 
  • Recreational B2B net sales in Q2 FY2022 decreased 1% over prior year period primarily due to insufficient supply of flower products with in-demand attributes and continued price compression, particularly in the value-priced dried flower category. These factors were largely offset by contribution from the acquisitions of Ace Valley and Supreme Cannabis.
  • Ā 
  • Recreational B2C net sales in Q2 FY2022 decreased 11% versus Q2 FY2021 largely driven by the rapid increase in third party retail locations across provinces.
  • Ā 
  • Medical net revenue in Q2 FY2022 decreased 6% from Q2 FY2021 driven primarily by higher average order sizes offset by a fewer number of orders.
  • Ā 

International Cannabis

Ā 
  • C 3 revenue in Q2 FY2022 decreased 13% year-over-year as a result of increased competition as well as the negative impact of FX, as the Canadian dollar has strengthened against the Euro compared to a year ago.
  • Ā 
  • Other revenue in Q2 FY2022 increased 98% over the prior year period primarily due to growth in U.S. CBD sales.
  • Ā 

Other Consumer Products

Ā 
  • S&B vaporizer revenue in Q2 FY2022 decreased 34% over Q2 FY2021 in part due to a strong comparison during the year-ago period,as well as shipping restrictions and production shortages caused by global supply chain difficulties.
  • Ā 
  • This Works sales in Q2 FY2022 increased 17% over Q2 FY2021, driven by Amazon and third-party e-commerce sales.
  • Ā 
  • BioSteel sales in Q2 FY2022 increased 47% over Q2 FY2021 driven by the launch of RTD beverages and expanded distribution in the U.S. market.
  • Ā 

The second quarter fiscal 2022 and second quarter fiscal 2021 financial results presented in this press release have been prepared in accordance with U.S. GAAP.

Ā 

Ā  Webcast and Conference Call Information Ā 

Ā 

The Company will host a conference call and audio webcast with David Klein , CEO and Mike Lee , CFO at 10:00 AM Eastern Time on NovemberĀ 5, 2021.

Ā 

Ā  Webcast Information
A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1505860&tp_key=a4b00798a9 Ā 

Ā 

Ā  Replay Information
A replay will be accessible by webcast until 11:59 PM ET on February 3, 2022 at:
https://produceredition.webcasts.com/starthere.jsp?ei=1505860&tp_key=a4b00798a9 Ā 

Ā 

Ā  Non-GAAP Measures Ā 

Ā 

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 Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission ("SEC").

Ā 

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 Quarterly Report on Form 10-Q to be filed with the SEC.

Ā 

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.

Ā 

Ā  About Canopy Growth Corporation Ā 

Ā 

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 .

Ā 

Ā  Notice Regarding Forward Looking Statements Ā 

Ā 

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.

Ā 

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

Ā 
  • 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;
  • Ā 
  • 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;
  • Ā 
  • 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;
  • Ā 
  • expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, strategic alliances, equity investments and dispositions;
  • Ā 
  • the amended plan of arrangement with Acreage Holdings, Inc., including the consummation of such acquisition;
  • Ā 
  • 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.
  • Ā 
  • the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;
  • Ā 
  • our international activities and joint venture interests, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact;
  • Ā 
  • 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;
  • Ā 
  • the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids;
  • Ā 
  • 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");
  • Ā 
  • 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 (the "Notes") issued by Canopy Growth and held by the CBI Group;
  • Ā 
  • expectations regarding the use of proceeds of equity financings, including the proceeds from CBI;
  • Ā 
  • 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;
  • Ā 
  • our ability to execute on our strategy and the anticipated benefits of such strategy;
  • Ā 
  • 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;
  • Ā 
  • 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;
  • Ā 
  • the timing and nature of legislative changes in the U.S. regarding the regulation of cannabis including tetrahydrocannabinol ("THC");
  • Ā 
  • the future performance of our business and operations;
  • Ā 
  • our competitive advantages and business strategies;
  • Ā 
  • the competitive conditions of the industry;
  • Ā 
  • the expected growth in the number of customers using our products;
  • Ā 
  • our ability or plans to identify, develop, commercialize or expand our technology and research and development initiatives in cannabinoids, or the success thereof;
  • Ā 
  • expectations regarding revenues, expenses and anticipated cash needs;
  • Ā 
  • expectations regarding cash flow, liquidity and sources of funding;
  • Ā 
  • expectations regarding capital expenditures;
  • Ā 
  • 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;
  • Ā 
  • the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses;
  • Ā 
  • the expected growth in our growing, production and supply chain capacities;
  • Ā 
  • expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations;
  • Ā 
  • expectations with respect to future production costs;
  • Ā 
  • expectations with respect to future sales and distribution channels and networks;
  • Ā 
  • the expected methods to be used to distribute and sell our products;
  • Ā 
  • our future product offerings;
  • Ā 
  • the anticipated future gross margins of our operations;
  • Ā 
  • accounting standards and estimates;
  • Ā 
  • expectations regarding our distribution network;
  • Ā 
  • 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
  • Ā 
  • expectations on price changes in cannabis markets.
  • Ā 

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.

Ā 

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.

Ā 

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; 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; 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, 2021 . Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

Ā 

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.

Ā 

Ā  Schedule 1 Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 

Ā Ā  CANOPY GROWTH CORPORATION Ā Ā 

Ā 

Ā Ā  CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS Ā Ā 

Ā 

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

Ā 
Ā 
Ā 

Ā Ā  September 30, Ā Ā 

Ā 

Ā Ā  2021 Ā Ā 

Ā 
Ā 

Ā Ā  March Ā Ā Ā  31, Ā Ā 

Ā 

Ā Ā  2021 Ā Ā 

Ā 
Ā 

Ā Ā  ASSETS Ā Ā 

Ā 
Ā 

Ā  Current assets: Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Cash and cash equivalents Ā 

Ā 
Ā 

Ā  $807,621 Ā 

Ā 
Ā 

Ā  $1,154,653 Ā 

Ā 
Ā 

Ā  Short-term investments Ā 

Ā 
Ā 

Ā  1,150,325 Ā 

Ā 
Ā 

Ā  1,144,563 Ā 

Ā 
Ā 

Ā  Restricted short-term investments Ā 

Ā 
Ā 

Ā  12,219 Ā 

Ā 
Ā 

Ā  11,332 Ā 

Ā 
Ā 

Ā  Amounts receivable, net Ā 

Ā 
Ā 

Ā  92,630 Ā 

Ā 
Ā 

Ā  92,435 Ā 

Ā 
Ā 

Ā  Inventory Ā 

Ā 
Ā 

Ā  353,309 Ā 

Ā 
Ā 

Ā  367,979 Ā 

Ā 
Ā 

Ā  Prepaid expenses and other assets Ā 

Ā 
Ā 

Ā  86,905 Ā 

Ā 
Ā 

Ā  67,232 Ā 

Ā 
Ā 

Ā  Total current assets Ā 

Ā 
Ā 

Ā  2,503,009 Ā 

Ā 
Ā 

Ā  2,838,194 Ā 

Ā 
Ā 

Ā  Other financial assets Ā 

Ā 
Ā 

Ā  509,284 Ā 

Ā 
Ā 

Ā  708,167 Ā 

Ā 
Ā 

Ā  Property, plant and equipment Ā 

Ā 
Ā 

Ā  1,123,323 Ā 

Ā 
Ā 

Ā  1,074,537 Ā 

Ā 
Ā 

Ā  Intangible assets Ā 

Ā 
Ā 

Ā  342,172 Ā 

Ā 
Ā 

Ā  308,167 Ā 

Ā 
Ā 

Ā  Goodwill Ā 

Ā 
Ā 

Ā  2,004,006 Ā 

Ā 
Ā 

Ā  1,889,354 Ā 

Ā 
Ā 

Ā  Other assets Ā 

Ā 
Ā 

Ā  8,962 Ā 

Ā 
Ā 

Ā  5,061 Ā 

Ā 
Ā 

Ā  Total assets Ā 

Ā 
Ā 

Ā  $6,490,756 Ā 

Ā 
Ā 

Ā  $6,823,480 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  LIABILITIES AND SHAREHOLDERS' EQUITY Ā Ā 

Ā 
Ā 

Ā  Current liabilities: Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Accounts payable Ā 

Ā 
Ā 

Ā  $94,367 Ā 

Ā 
Ā 

Ā  $67,262 Ā 

Ā 
Ā 

Ā  Other accrued expenses and liabilities Ā 

Ā 
Ā 

Ā  86,076 Ā 

Ā 
Ā 

Ā  100,813 Ā 

Ā 
Ā 

Ā  Current portion of long-term debt Ā 

Ā 
Ā 

Ā  8,825 Ā 

Ā 
Ā 

Ā  9,827 Ā 

Ā 
Ā 

Ā  Other liabilities Ā 

Ā 
Ā 

Ā  70,635 Ā 

Ā 
Ā 

Ā  106,428 Ā 

Ā 
Ā 

Ā  Total current liabilities Ā 

Ā 
Ā 

Ā  259,903 Ā 

Ā 
Ā 

Ā  284,330 Ā 

Ā 
Ā 

Ā  Long-term debt Ā 

Ā 
Ā 

Ā  1,517,778 Ā 

Ā 
Ā 

Ā  1,573,136 Ā 

Ā 
Ā 

Ā  Deferred income tax liabilities Ā 

Ā 
Ā 

Ā  25,464 Ā 

Ā 
Ā 

Ā  21,379 Ā 

Ā 
Ā 

Ā  Liability arising from Acreage Arrangement Ā 

Ā 
Ā 

Ā  162,000 Ā 

Ā 
Ā 

Ā  600,000 Ā 

Ā 
Ā 

Ā  Warrant derivative liability Ā 

Ā 
Ā 

Ā  104,773 Ā 

Ā 
Ā 

Ā  615,575 Ā 

Ā 
Ā 

Ā  Other liabilities Ā 

Ā 
Ā 

Ā  105,818 Ā 

Ā 
Ā 

Ā  107,240 Ā 

Ā 
Ā 

Ā  Total liabilities Ā 

Ā 
Ā 

Ā  2,175,736 Ā 

Ā 
Ā 

Ā  3,201,660 Ā 

Ā 
Ā 

Ā  Commitments and contingencies Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Redeemable noncontrolling interest Ā 

Ā 
Ā 

Ā  69,400 Ā 

Ā 
Ā 

Ā  135,300 Ā 

Ā 
Ā 

Ā  Canopy Growth Corporation shareholders' equity: Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Common shares - $nil par value; Authorized - unlimited number of shares;
Ā  Issued - 393,383,061 shares and 382,875,179 shares, respectively Ā 

Ā 
Ā 

Ā  7,468,717 Ā 

Ā 
Ā 

Ā  7,168,557 Ā 

Ā 
Ā 

Ā  Additional paid-in capital Ā 

Ā 
Ā 

Ā  2,485,914 Ā 

Ā 
Ā 

Ā  2,415,650 Ā 

Ā 
Ā 

Ā  Accumulated other comprehensive loss Ā 

Ā 
Ā 

Ā  (27,448) Ā 

Ā 
Ā 

Ā  (34,240) Ā 

Ā 
Ā 

Ā  Deficit Ā 

Ā 
Ā 

Ā  (5,686,796) Ā 

Ā 
Ā 

Ā  (6,068,156) Ā 

Ā 
Ā 

Ā  Total Canopy Growth Corporation shareholders' equity Ā 

Ā 
Ā 

Ā  4,240,387 Ā 

Ā 
Ā 

Ā  3,481,811 Ā 

Ā 
Ā 

Ā  Noncontrolling interests Ā 

Ā 
Ā 

Ā  5,233 Ā 

Ā 
Ā 

Ā  4,709 Ā 

Ā 
Ā 

Ā  Total shareholders' equity Ā 

Ā 
Ā 

Ā  4,245,620 Ā 

Ā 
Ā 

Ā  3,486,520 Ā 

Ā 
Ā 

Ā  Total liabilities and shareholders' equity Ā 

Ā 
Ā 

Ā  $6,490,756 Ā 

Ā 
Ā 

Ā  $6,823,480 Ā 

Ā 
Ā 
Ā 

Ā  Schedule 2 Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 

Ā Ā  CANOPY GROWTH CORPORATION Ā Ā 

Ā 

Ā Ā  CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS Ā Ā 

Ā 

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

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  Three months ended September 30, Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  2021 Ā Ā 

Ā 
Ā 

Ā Ā  2020 Ā Ā 

Ā 
Ā 

Ā  Revenue Ā 

Ā 
Ā 

Ā  $145,648 Ā 

Ā 
Ā 

Ā  $150,828 Ā 

Ā 
Ā 

Ā  Excise taxes Ā 

Ā 
Ā 

Ā  14,274 Ā 

Ā 
Ā 

Ā  15,562 Ā 

Ā 
Ā 

Ā  Net revenue Ā 

Ā 
Ā 

Ā  131,374 Ā 

Ā 
Ā 

Ā  135,266 Ā 

Ā 
Ā 

Ā  Cost of goods sold Ā 

Ā 
Ā 

Ā  202,514 Ā 

Ā 
Ā 

Ā  109,186 Ā 

Ā 
Ā 

Ā  Gross margin Ā 

Ā 
Ā 

Ā  (71,140) Ā 

Ā 
Ā 

Ā  26,080 Ā 

Ā 
Ā 

Ā  Operating expenses: Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Selling, general and administrative expenses Ā 

Ā 
Ā 

Ā  125,756 Ā 

Ā 
Ā 

Ā  147,253 Ā 

Ā 
Ā 

Ā  Share-based compensation Ā 

Ā 
Ā 

Ā  15,953 Ā 

Ā 
Ā 

Ā  21,984 Ā 

Ā 
Ā 

Ā  Expected credit losses on financial assets and related charges Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  94,745 Ā 

Ā 
Ā 

Ā  Asset impairment and restructuring costs Ā 

Ā 
Ā 

Ā  2,510 Ā 

Ā 
Ā 

Ā  46,363 Ā 

Ā 
Ā 

Ā  Total operating expenses Ā 

Ā 
Ā 

Ā  144,219 Ā 

Ā 
Ā 

Ā  310,345 Ā 

Ā 
Ā 

Ā  Operating loss Ā 

Ā 
Ā 

Ā  (215,359) Ā 

Ā 
Ā 

Ā  (284,265) Ā 

Ā 
Ā 

Ā  Loss from equity method investments Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  (32,991) Ā 

Ā 
Ā 

Ā  Other income (expense), net Ā 

Ā 
Ā 

Ā  195,821 Ā 

Ā 
Ā 

Ā  221,256 Ā 

Ā 
Ā 

Ā  Loss before income taxes Ā 

Ā 
Ā 

Ā  (19,538) Ā 

Ā 
Ā 

Ā  (96,000) Ā 

Ā 
Ā 

Ā  Income tax recovery (expense) Ā 

Ā 
Ā 

Ā  3,207 Ā 

Ā 
Ā 

Ā  (552) Ā 

Ā 
Ā 

Ā  Net loss Ā 

Ā 
Ā 

Ā  (16,331) Ā 

Ā 
Ā 

Ā  (96,552) Ā 

Ā 
Ā 

Ā  Net loss attributable to noncontrolling interests and redeemable
Ā  noncontrolling interest Ā 

Ā 
Ā 

Ā  (5,273) Ā 

Ā 
Ā 

Ā  (64,491) Ā 

Ā 
Ā 

Ā  Net loss attributable to Canopy Growth Corporation Ā 

Ā 
Ā 

Ā  $(11,058) Ā 

Ā 
Ā 

Ā  $(32,061) Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Basic (loss) earnings per share Ā 

Ā 
Ā 

Ā  $(0.03) Ā 

Ā 
Ā 

Ā  $(0.09) Ā 

Ā 
Ā 

Ā  Basic weighted average common shares outstanding Ā 

Ā 
Ā 

Ā  393,274,758 Ā 

Ā 
Ā 

Ā  371,520,534 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Diluted (loss) earnings per share Ā 

Ā 
Ā 

Ā  $(0.03) Ā 

Ā 
Ā 

Ā  $(0.09) Ā 

Ā 
Ā 

Ā  Diluted weighted average common shares outstanding Ā 

Ā 
Ā 

Ā  393,274,758 Ā 

Ā 
Ā 

Ā  371,520,534 Ā 

Ā 
Ā 
Ā 

Ā  Schedule 3 Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 

Ā Ā  CANOPY GROWTH CORPORATION Ā Ā 

Ā 

Ā Ā  CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS Ā Ā 

Ā 

Ā  (in thousands of Canadian dollars, unaudited) Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  Six months ended September Ā Ā Ā  30, Ā Ā 

Ā 
Ā 
Ā 

Ā Ā  2021 Ā Ā 

Ā 
Ā 

Ā Ā  2020 Ā Ā 

Ā 
Ā 

Ā Ā  Cash flows from operating activities: Ā Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Net income (loss) Ā 

Ā 
Ā 

Ā  $373,624 Ā 

Ā 
Ā 

Ā  $(224,874) Ā 

Ā 
Ā 

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

Ā 
Ā 
Ā 
Ā 

Ā  Depreciation of property, plant and equipment Ā 

Ā 
Ā 

Ā  37,108 Ā 

Ā 
Ā 

Ā  36,373 Ā 

Ā 
Ā 

Ā  Amortization of intangible assets Ā 

Ā 
Ā 

Ā  16,804 Ā 

Ā 
Ā 

Ā  29,432 Ā 

Ā 
Ā 

Ā  Share of loss on equity method investments Ā 

Ā 
Ā 

Ā  100 Ā 

Ā 
Ā 

Ā  40,180 Ā 

Ā 
Ā 

Ā  Share-based compensation Ā 

Ā 
Ā 

Ā  29,079 Ā 

Ā 
Ā 

Ā  52,669 Ā 

Ā 
Ā 

Ā  Asset impairment and restructuring costs Ā 

Ā 
Ā 

Ā  80,690 Ā 

Ā 
Ā 

Ā  59,157 Ā 

Ā 
Ā 

Ā  Expected credit losses on financial assets and related charges Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  94,745 Ā 

Ā 
Ā 

Ā  Income tax recovery Ā 

Ā 
Ā 

Ā  (307) Ā 

Ā 
Ā 

Ā  (2,486) Ā 

Ā 
Ā 

Ā  Non-cash fair value adjustments Ā 

Ā 
Ā 

Ā  (834,090) Ā 

Ā 
Ā 

Ā  (268,143) Ā 

Ā 
Ā 

Ā  Change in operating assets and liabilities, net of effects from
Ā  purchases of businesses: Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Amounts receivable Ā 

Ā 
Ā 

Ā  12,354 Ā 

Ā 
Ā 

Ā  1,498 Ā 

Ā 
Ā 

Ā  Prepaid expenses and other assets Ā 

Ā 
Ā 

Ā  (3,423) Ā 

Ā 
Ā 

Ā  (6,604) Ā 

Ā 
Ā 

Ā  Inventory Ā 

Ā 
Ā 

Ā  40,208 Ā 

Ā 
Ā 

Ā  (23,500) Ā 

Ā 
Ā 

Ā  Accounts payable and accrued liabilities Ā 

Ā 
Ā 

Ā  3,778 Ā 

Ā 
Ā 

Ā  (11,408) Ā 

Ā 
Ā 

Ā  Other, including non-cash foreign currency Ā 

Ā 
Ā 

Ā  (7,670) Ā 

Ā 
Ā 

Ā  (57,334) Ā 

Ā 
Ā 

Ā  Net cash used in operating activities Ā 

Ā 
Ā 

Ā  (251,745) Ā 

Ā 
Ā 

Ā  (280,295) Ā 

Ā 
Ā 

Ā Ā  Cash flows from investing activities: Ā Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Purchases of and deposits on property, plant and equipment Ā 

Ā 
Ā 

Ā  (35,658) Ā 

Ā 
Ā 

Ā  (90,195) Ā 

Ā 
Ā 

Ā  Purchases of intangible assets Ā 

Ā 
Ā 

Ā  (2,729) Ā 

Ā 
Ā 

Ā  (7,604) Ā 

Ā 
Ā 

Ā  Proceeds on sale of property, plant and equipment Ā 

Ā 
Ā 

Ā  2,290 Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  Proceeds on sale of intangible assets Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  18,337 Ā 

Ā 
Ā 

Ā  Purchases of short-term investments Ā 

Ā 
Ā 

Ā  (705) Ā 

Ā 
Ā 

Ā  (367,779) Ā 

Ā 
Ā 

Ā  Net cash proceeds on sale of subsidiaries Ā 

Ā 
Ā 

Ā  10,324 Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  (Investments in) sale of other financial assets Ā 

Ā 
Ā 

Ā  110 Ā 

Ā 
Ā 

Ā  (7,526) Ā 

Ā 
Ā 

Ā  Investment in Acreage Arrangement Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  (49,849) Ā 

Ā 
Ā 

Ā  Loan advanced to Acreage Hempco Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  (66,995) Ā 

Ā 
Ā 

Ā  Net cash outflow on acquisition of subsidiaries Ā 

Ā 
Ā 

Ā  (9,070) Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  Other investing activities Ā 

Ā 
Ā 

Ā  (10,859) Ā 

Ā 
Ā 

Ā  3,481 Ā 

Ā 
Ā 

Ā  Net cash used in investing activities Ā 

Ā 
Ā 

Ā  (46,297) Ā 

Ā 
Ā 

Ā  (568,130) Ā 

Ā 
Ā 

Ā Ā  Cash flows from financing activities: Ā Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Proceeds from issuance of common shares and warrants Ā 

Ā 
Ā 

Ā  1,460 Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  Proceeds from exercise of stock options Ā 

Ā 
Ā 

Ā  4,886 Ā 

Ā 
Ā 

Ā  10,756 Ā 

Ā 
Ā 

Ā  Proceeds from exercise of warrants Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  244,990 Ā 

Ā 
Ā 

Ā  Issuance of long-term debt Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  1,564 Ā 

Ā 
Ā 

Ā  Repayment of long-term debt Ā 

Ā 
Ā 

Ā  (49,991) Ā 

Ā 
Ā 

Ā  (5,920) Ā 

Ā 
Ā 

Ā  Other financing activities Ā 

Ā 
Ā 

Ā  (3,036) Ā 

Ā 
Ā 

Ā  (585) Ā 

Ā 
Ā 

Ā  Net cash (used in) provided by financing activities Ā 

Ā 
Ā 

Ā  (46,681) Ā 

Ā 
Ā 

Ā  250,805 Ā 

Ā 
Ā 

Ā  Effect of exchange rate changes on cash and cash equivalents Ā 

Ā 
Ā 

Ā  (2,309) Ā 

Ā 
Ā 

Ā  (32,269) Ā 

Ā 
Ā 

Ā  Net decrease in cash and cash equivalents Ā 

Ā 
Ā 

Ā  (347,032) Ā 

Ā 
Ā 

Ā  (629,889) Ā 

Ā 
Ā 

Ā  Cash and cash equivalents, beginning of period Ā 

Ā 
Ā 

Ā  1,154,653 Ā 

Ā 
Ā 

Ā  1,303,176 Ā 

Ā 
Ā 

Ā  Cash and cash equivalents, end of period Ā 

Ā 
Ā 

Ā  $807,621 Ā 

Ā 
Ā 

Ā  $673,287 Ā 

Ā 
Ā 
Ā 

Ā  Schedule 4 Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 

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

Ā 
Ā 
Ā 

Ā  Three months ended September 30, Ā 

Ā 
Ā 

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

Ā 
Ā 

Ā  2021 Ā 

Ā 
Ā 

Ā  2020 Ā 

Ā 
Ā 

Ā  Net revenue Ā 

Ā 
Ā 

Ā  $131,374 Ā 

Ā 
Ā 

Ā  $135,266 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Gross margin, as reported Ā 

Ā 
Ā 

Ā  (71,140) Ā 

Ā 
Ā 

Ā  26,080 Ā 

Ā 
Ā 

Ā  Adjustments to gross margin: Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Charges related to the flow-through of inventory Ā 

Ā 

Ā  step-up on business combinations Ā 

Ā 
Ā 

Ā  3,123 Ā 

Ā 
Ā 

Ā  281 Ā 

Ā 
Ā 

Ā  Adjusted gross margin 1 Ā 

Ā 
Ā 

Ā  $(68,017) Ā 

Ā 
Ā 

Ā  $26,361 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Adjusted gross margin percentage 1 Ā 

Ā 
Ā 

Ā  (52%) Ā 

Ā 
Ā 

Ā  19% Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

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

Ā 
Ā 
Ā 

Ā 

Ā 

Ā  Schedule 5 Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 

Ā Ā  Adjusted EBITDA Ā Ā  1 Ā  Reconciliation (Non-GAAP Measure) Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Three months ended September 30, Ā 

Ā 
Ā 

Ā Ā  (in thousands of Canadian dollars, unaudited) Ā Ā 

Ā 
Ā 

Ā  2021 Ā 

Ā 
Ā 

Ā  2020 Ā 

Ā 
Ā 

Ā  Net loss Ā 

Ā 
Ā 

Ā  $(16,331) Ā 

Ā 
Ā 

Ā  $(96,552) Ā 

Ā 
Ā 

Ā  Income tax (recovery) expense Ā 

Ā 
Ā 

Ā  (3,207) Ā 

Ā 
Ā 

Ā  552 Ā 

Ā 
Ā 

Ā  Other (income) expense, net Ā 

Ā 
Ā 

Ā  (195,821) Ā 

Ā 
Ā 

Ā  (221,256) Ā 

Ā 
Ā 

Ā  Loss on equity method investments Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  32,991 Ā 

Ā 
Ā 

Ā  Share-based compensation 2 Ā 

Ā 
Ā 

Ā  15,953 Ā 

Ā 
Ā 

Ā  21,984 Ā 

Ā 
Ā 

Ā  Acquisition-related costs Ā 

Ā 
Ā 

Ā  2,391 Ā 

Ā 
Ā 

Ā  3,472 Ā 

Ā 
Ā 

Ā  Depreciation and amortization 2 Ā 

Ā 
Ā 

Ā  28,780 Ā 

Ā 
Ā 

Ā  31,758 Ā 

Ā 
Ā 

Ā  Asset impairment and restructuring costs Ā 

Ā 
Ā 

Ā  2,510 Ā 

Ā 
Ā 

Ā  46,363 Ā 

Ā 
Ā 

Ā  Expected credit losses on financial assets
Ā  and related charges Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  94,745 Ā 

Ā 
Ā 

Ā  Charges related to the flow-through of inventory
Ā  step-up on business combinations Ā 

Ā 
Ā 

Ā  3,123 Ā 

Ā 
Ā 

Ā  281 Ā 

Ā 
Ā 

Ā  Adjusted EBITDA 1 Ā 

Ā 
Ā 

Ā  $(162,602) Ā 

Ā 
Ā 

Ā  $(85,662) Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

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

Ā 
Ā 

Ā Ā  2 From Condensed Interim Consolidated Statements of Cash Flows. Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā 

Ā 

Ā  Schedule 6 Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 

Ā Ā  Free Cash Flow Reconciliation Ā Ā  1 Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Three months ended September 30, Ā 

Ā 
Ā 

Ā Ā  (in thousands of Canadian dollars, unaudited) Ā Ā 

Ā 
Ā 

Ā  2021 Ā 

Ā 
Ā 

Ā  2020 Ā 

Ā 
Ā 

Ā  Net cash used in operating activities Ā 

Ā 
Ā 

Ā  $(85,965) Ā 

Ā 
Ā 

Ā  $(161,749) Ā 

Ā 
Ā 

Ā  Purchases of and deposits on property, plant and equipment Ā 

Ā 
Ā 

Ā  (15,379) Ā 

Ā 
Ā 

Ā  (28,648) Ā 

Ā 
Ā 

Ā  Free cash flow 1 Ā 

Ā 
Ā 

Ā  $(101,344) Ā 

Ā 
Ā 

Ā  $(190,397) Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

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

Ā 
Ā 
Ā 

Ā  Schedule 7 Ā 

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 

Ā Ā  Segmented Gross Margin Reconciliation Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Three months ended September 30, Ā 

Ā 
Ā 

Ā Ā  (in thousands of Canadian dollars, unaudited) Ā Ā 

Ā 
Ā 

Ā  2021 Ā 

Ā 
Ā 

Ā  2020 Ā 

Ā 
Ā 

Ā  Global cannabis segment Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Net revenue Ā 

Ā 
Ā 

Ā  $95,325 Ā 

Ā 
Ā 

Ā  $94,294 Ā 

Ā 
Ā 

Ā  Cost of goods sold Ā 

Ā 
Ā 

Ā  177,917 Ā 

Ā 
Ā 

Ā  82,232 Ā 

Ā 
Ā 

Ā  Gross margin Ā 

Ā 
Ā 

Ā  (82,592) Ā 

Ā 
Ā 

Ā  12,062 Ā 

Ā 
Ā 

Ā  Gross margin percentage Ā 

Ā 
Ā 

Ā  (87%) Ā 

Ā 
Ā 

Ā  13% Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Other consumer products segment Ā 

Ā 
Ā 
Ā 
Ā 

Ā  Revenue Ā 

Ā 
Ā 

Ā  $36,049 Ā 

Ā 
Ā 

Ā  $40,972 Ā 

Ā 
Ā 

Ā  Cost of goods sold Ā 

Ā 
Ā 

Ā  24,597 Ā 

Ā 
Ā 

Ā  26,954 Ā 

Ā 
Ā 

Ā  Gross margin Ā 

Ā 
Ā 

Ā  11,452 Ā 

Ā 
Ā 

Ā  14,018 Ā 

Ā 
Ā 

Ā  Gross margin percentage Ā 

Ā 
Ā 

Ā  32% Ā 

Ā 
Ā 

Ā  34% Ā 

Ā 
Ā 
Ā 

Ā  Schedule 8 Ā 

Ā 

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

Ā 
Ā 
Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā 
Ā 
Ā 
Ā 

Ā  Three months ended Ā 

Ā 
Ā 

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

Ā 
Ā 

Ā  September 30, 2021 Ā 

Ā 
Ā 

Ā  September 30, 2020 Ā 

Ā 
Ā 

Ā Ā  Global cannabis segment Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Net revenue Ā 

Ā 
Ā 
Ā 

Ā  $95,325 Ā 

Ā 
Ā 

Ā  $94,294 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Gross margin, as reported Ā 

Ā 
Ā 
Ā 

Ā  (82,592) Ā 

Ā 
Ā 

Ā  12,062 Ā 

Ā 
Ā 

Ā  Adjustments to gross margin: Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Charges related to the flow-through of inventory
Ā  step-up on business combinations Ā 

Ā 
Ā 
Ā 

Ā  3,123 Ā 

Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  Adjusted gross margin 1 Ā 

Ā 
Ā 
Ā 

Ā  $(79,469) Ā 

Ā 
Ā 

Ā  $12,062 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Adjusted gross margin percentage 1 Ā 

Ā 
Ā 
Ā 

Ā  (83%) Ā 

Ā 
Ā 

Ā  13% Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā Ā  Other consumer products segment Ā Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Revenue Ā 

Ā 
Ā 
Ā 

Ā  $36,049 Ā 

Ā 
Ā 

Ā  $40,972 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Gross margin, as reported Ā 

Ā 
Ā 
Ā 

Ā  11,452 Ā 

Ā 
Ā 

Ā  14,018 Ā 

Ā 
Ā 

Ā  Adjustments to gross margin: Ā 

Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Charges related to the flow-through of inventory
Ā  step-up on business combinations Ā 

Ā 
Ā 
Ā 

Ā  - Ā 

Ā 
Ā 

Ā  281 Ā 

Ā 
Ā 

Ā  Adjusted gross margin 1 Ā 

Ā 
Ā 
Ā 

Ā  $11,452 Ā 

Ā 
Ā 

Ā  $14,299 Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

Ā  Adjusted gross margin percentage 1 Ā 

Ā 
Ā 
Ā 

Ā  32% Ā 

Ā 
Ā 

Ā  35% Ā 

Ā 
Ā 
Ā 
Ā 
Ā 
Ā 

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

Ā 
Ā 
Ā 

Ā 

Ā 
Ā 
Ā 

Ā Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/canopy-growth-reports-second-quarter-fiscal-2022-financial-results-301417390.html Ā 

Ā 

SOURCE Canopy Growth Corporation

Ā 

Ā 

Ā 

Ā Cision View original content to download multimedia: https://www.newswire.ca/en/releases/archive/November2021/05/c7638.html Ā 

Ā 
Ā 

News Provided by Canada Newswire via QuoteMedia

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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 ā€œtotal THC,ā€ 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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