Investors retreat after Canopy Growth Corp. reports $1.3-billion annual loss

Canopy’s financial woes haven’t helped the share prices of other Canadian licensed weed producers.

Canopy Growth Corporation CEO David Klein has revisited a deal to purchase a New York company if the U.S. legalizes weed.

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Shares in Canada’s most valuable weed company plunged more than 20 percent on Friday (May 29).

Canopy Growth Corp. closed the day at $24.21 on the Toronto Stock Exchange after reporting a $1.3-billion annual loss.

This dropped the Smith Falls, Ontario–based licensed producer’s market capitalization to $8.47 billion. On the week, Canopy Growth Corporation shares were down 12.7 percent.

In a statement, the company noted that it has recorded impairment and restructuring charges of $743 million—the majority of which are non-cash.

“Through the COVID-19 pandemic we have worked hard to ensure the health and well-being of our teams and customers and the continuity of our business,” CEO David Klein said. 

“During this time, our team has rolled out our exciting new cannabis-infused beverages and vape products in Canada and a portfolio of CBD products in the U.S.,” he continued. “True to key priorities that I have outlined for Canopy, we have taken steps to align our capacity with the current market demand and focus our resources against the core markets with the largest and most tangible near-term profit opportunity.”

Klein is the former chief financial officer of beverage giant Constellation Brands, which holds a 38.6-percent stake in Canopy Growth Corp.

He also announced a “strategy reset and organizational redesign” over the next fiscal year, which will involve no longer striving to be first to every market.

“We are building what we believe is the best cannabis company in the world by putting the consumer at the heart of everything we do and are re-aligning our organization to be faster and more agile.”

Some other Canadian cannabis companies also saw their share price fall significantly on Friday in the wake of the Canopy freefall.

For example, Edmonton-based Aurora Cannabis Inc. stock pulled back 9.1 percent to close at $19.27 in Toronto.

Tilray Inc., which is headquartered in Nanaimo, saw its shares drop 5.2 percent to close at US$9.85 on NASDAQ.

Moncton-based Organigram Holdings Inc. stock fell 6.2 percent to end the day at $2.42 in Toronto.

Ottawa-based Hexo Corp. shares were off 7 percent to close at US$0.63 on the New York Stock Exchange.

And shares in Toronto-based Cronos Group declined by 3 percent on the day to close at $9.03 on the TSX.

Meanwhile, shares in Aphria Inc., which is based in Leamington, Ontario, fell only 2.19 percent on Friday. Over the course of the week, Aphria’s share price was up 3.6 percent—closing at $5.81 in Toronto—making it one of the few bright spots among Canadian weed stocks.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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