Canopy Growth reported a net loss of 115 million Canadian dollars ($90 million) in its quarter ended Dec. 31, 2021, on lower cannabis sales in its important Canada market.
The Smiths Falls, Ontario-based company’s third-quarter net revenue was CA$141 million, slightly ahead of analysts’ expectations.
However, that represented an 8% decline versus the comparable period last year
In Canada, Canopy continued to struggle selling cannabis.
Recreational cannabis sales fell to CA$47.8 million – the lowest level in over one calendar year – and a 25% reduction compared to the same period one year ago.
Medical cannabis sales in Canada fell 7% versus one year ago, to CA$12.9 million in the quarter.
In Canada, gross sales of dry bud plunged almost 30% to CA$47 million in Q3, but sales of oils and softgels inched higher, to CA$8.8 million.
One of the biggest areas of concern for Canopy is the so-called 2.0 category, consisting of beverages, edibles, topicals and vapes.
The company once had ambitions to rule the category, but gross sales of 2.0 products declined to CA$5.8 million, 40% lower year-on-year.
In a conference call to discuss the quarter, analyst Owen Bennett asked the company what went wrong.
Canopy CEO David Klein said that “the key unlock is if we get movement on equivalency in Canada, because we just can’t sell the volumes across the market that would be necessary to get the kind of returns that we want.”
He’s hopeful that comes in the not-too-distant future.
The company’s global cannabis net revenue fell 20% year-over-year to only CA$83 million in the October-December quarter.
Storz & Bickel, Canopy’s vaporizer device brand, provided a bright spot, with sales rising in the quarter to CA$25.2 million.
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The company’s sports nutrition brand, BioSteel, provided another area of strength.
BioSteel sales soared 130% year-over-year to CA$17 million in the third quarter.
Canopy also booked asset impairment and restructuring costs worth CA$36.4 million.
The company had CA$1.4 billion in cash as of Dec. 31, 2021.
Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.