"I must not have done it right"... That's the uninspired reaction from investors after Canopy Growth's earnings just before the weekend. Based in Canada, the world's largest cannabis corporation fell 8% based on these low-lights:
- Revenue for its high-end dried weed jars, prescription-looking softgel canisters, and yoga-friendly vapes (check these out) only rose 13% from last quarter to $94M (Canadian dollars).
- Good ol' supply and demand was an issue, as Canopy sold 9.3K kilos of "product" and expects to grow 34K kilos this quarter. That surplus-y situation pushed the average price of pot sold down 11% to $7.49/gram.
Going from black market to white is tough... Hype for Canada's recreational weed legalization last October pushed Canopy's market value to $13B. Now it needs to convince cannabis buyers to switch from "their guy" to "the man," AKA Canopy's corporate-branded products. It also has to deal with regulation, taxes, and advertising rules that limit it to medical-style bland marketing.
Canopy is the pot stock in global prep mode... Thanks in part to the $4B investment it got from Corona-owner Constellation Brands, Canopy has acquired production facilities, device companies, and retail stores — The value chain is Canopy's from plant to pipe. Now it's awkwardly waiting for growth catalysts:
- Ontario: The biggest province by population (40% of Canada's pop) just got marijuana retail stores in April, so first-time Canadians are trying it out.
- US: Not legal yet nationwide, but when/if it is, Canopy's acquisition of pot producer Acreage Holdings will be legally complete.
- UK: Last month it acquired London-based This Works, a natural skincare developer with a CBD interest.
- Gummies: Edibles are legalized in Canada this fall, and Canopy's new 197K square foot plant will be ready to start cooking.