Canopy Growth Corp. reported the worst quarterly loss in its history as the company’s “value” cannabis sales declined as part of its business transition to “premium” products.
The Smiths Falls, Ontario-based business on Friday reported a first-quarter net loss of 2.1 billion Canadian dollars ($1.6 billion) after the struggling licensed producer booked goodwill impairments worth CA$1.7 billion related to its cannabis unit.
First-quarter net revenue for the financial year 2023 fell 19% compared to the first quarter of 2022, dragged down by plunging recreational marijuana sales.
For the three months ended June 30, Canopy’s recreational marijuana sales in Canada declined 35% year-over-year to CA$39 million. Sales were CA$60 million in the same period last year.
Canopy blamed the crashing sales on its “deliberate business transition to focus on higher margin, premium and mainstream products,” according to a news release announcing the quarterly results.
Global cannabis net revenue declined 29% in the first quarter, compared to last year, to CA$66.2 million.
Canopy cited falling “value” flower sales in the Canadian recreational cannabis market while the company pivots to higher-margin premium products.
The CA$2.1 billion loss in the quarter, the largest in the company’s history, brings Canopy’s cumulative losses since 2015 to almost CA$6 billion.
Canadian medical cannabis sales were flat year-over-year at CA$13.4 million in the quarter.
By adult-use product form, sales of:
- Dry bud decreased 42% year-over-year to only CA$38.6 million.
- Oils and softgels fell 9% year-over-year to only CA$5.2 million.
- Beverages, edibles, topicals and vapes decreased to 19% to CA$7.4.
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In medical channels, sales of:
- Dry bud jumped 48% year-over-year to CA$14.2 million.
- Oils and soft gels dropped 55% to CA$9.2.
- Beverages, edibles, topicals and vapes rose 19% to CA$5 million.
There were tidbits of positive news in Canopy’s’ otherwise disappointing quarter.
The company said it maintained the No. 1 market share position in the premium flower and pre-roll segment.
Canopy also said its beverages maintained the No. 2 rank in the category for more than 5 milligrams of THC.
Another bright spot was first-quarter sales of BioSteel beverages, which jumped 169% year-over-year.
Canopy also said it had secured an agreement with Walmart to sell BioSteel in 2,200 stores in 39 U.S. states.
Cash and cash equivalents at the end of the quarter totaled CA$769 million.
Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.