Cannabis giant Canopy Growth’s international revenue shot up to 8.2 million Canadian dollars ($6.1 million) in the nine months ended Dec. 31, a nearly sixfold increase over the same period the previous year before, according to the company’s third-quarter fiscal 2019 results.
International sales represented 5.6% of gross revenue in the quarter, more than doubling from 2.5% a year earlier. International sales, primarily to Germany, accounted for 16% of medical sales.
Sales of medical cannabis overseas – especially in Europe – are a big part of the value proposition for many publicly traded Canadian marijuana companies, whose valuations have soared in recent years based mostly on high expectations in international markets.
Canopy recently closed a CA$5 billion investment from Constellation Brands and plans to put the capital toward intellectual property development or acquisition and “replicating its Canadian platform for success” across international markets.
Canopy has secured agreements to export cannabis to seven countries, plus some jurisdictions in the Caribbean and established subsidiaries in 15 countries.
Federal governments in nearly three dozen countries have established formal frameworks for access to medical cannabis.
In the nine months to Dec. 31, 2018, medical cannabis sold overseas fetched a 46% higher price than medical marijuana sold in Canada, according to the earnings report.
Canopy’s average sales price per gram of medical cannabis in international markets was CA$13.49; average price in Canada was CA$9.18 per gram.
Adult-use cannabis was just CA$6.96 per gram on average in the country for the same period.
Canopy said its strategic international business opportunities include:
- Providing advisory services to third parties to establish licensed cannabis cultivation and sales operations.
- Exporting marijuana and cannabis-based medicine.
- Ownership of cannabis cultivation, value-added marijuana-based product production and sales operations in countries outside of Canada.
Analysts expect export opportunities to be prevalent until countries legalizing medical cannabis are able to establish their own domestic cultivation facilities.
Additional takeaways from Canopy’s third-quarter fiscal 2019 include:
- Reported net income of CA$74.9 million.
- Adult-use cannabis revenue in Canada of CA$71.6 million.
- A year-over-year decrease of 18% in Canadian medical cannabis gross revenue, to CA$15.9 million.
- A 168% increase in international shipments of medical cannabis, to 204 kilograms (450 pounds).
- Marketing costs rose fourfold to CA$44 million.