Canopy Growth Announces Divestiture of Canadian Retail Operations

Canopy Growth Announces Divestiture of Canadian Retail Operations

Decision supports the Company’s strategic objectives including streamlining Canadian operations, achieving profitability, and advancing a premium brand-driven portfolio for consumers 
SMITHS FALLS, ON, Sept. 27, 2022 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) announced today that the Company has entered into agreements to divest its retail business across Canada which includes the stores operating under the Tweed and Tokyo Smoke retail banners. The announcement reinforces the Company’s focus on advancing its path to profitability as a premium brand-focused cannabis and consumer packaged goods (CPG) company.
The Company has reached an agreement (the “OEGRC Transaction”) with OEG Retail Cannabis (“OEGRC”), an existing Canopy Growth licensee partner that currently owns and operates the Company’s franchised Tokyo Smoke stores in Ontario. As part of this agreement, OEGRC has agreed to acquire all of Canopy Growth’s corporate stores outside of Alberta as well as all Tokyo Smoke-related intellectual property. The Company has also reached an agreement (the “FOUR20 Transaction”) with 420 Investments Ltd. (“FOUR20”) pursuant to which FOUR20 has agreed to acquire the ownership of five retail locations in Alberta. Closing of the OEGRC Transaction and the FOUR20 Transaction is subject to regulatory approvals and other customary closing conditions.
“We are taking the next critical step in advancing Canopy as a leading premium brand-focused CPG cannabis company while furthering the Company’s strategy of investing in product innovation and distribution to drive revenue growth in the Canadian recreational market,” said David Klein, CEO, Canopy Growth. “By realizing these agreements with organizations that possess proven cannabis retail expertise, we are providing continuity for consumers and team members. Through the best-in-class retail leadership that OEGRC and FOUR20 have demonstrated, they will continue to serve Canadian consumers with the high-quality in-store experiences that are essential for success in a new industry.”
Operational savings realized through these transactions are expected to result in Canopy’s projected selling, general, and administrative cost savings being closer to the high end of the annualized target range expected as part of the cost reduction actions announced on April 26, 2022.

Overview of the OEGRC Transaction:

  • Upon completion of the OEGRC Transaction, OEGRC will acquire ownership of 23 Tokyo Smoke and Tweed store locations across Manitoba, Saskatchewan, and Newfoundland and Labrador.
  • As part of the OEGRC Transaction, the Tokyo Smoke brand will be transferred to OEGRC and any purchased stores currently branded as Tweed will be rebranded.
  • The master franchise agreement between the Company and OEGRC pursuant to which OEGRC licenses the Tokyo Smoke brand in Ontario will be terminated on the closing of the OEGRC Transaction.

Overview of the FOUR20 Transaction:

  • FOUR20, a licensed cannabis retailer, will purchase five of the Company’s corporate stores in Alberta. Following the close of the FOUR20 Transaction, these stores will be rebranded under FOUR20’s retail banner.

All in-store team members working in the locations being acquired will see their employment continue with OEGRC and FOUR20 pending completion of these transactions.
In addition to the foregoing divestitures, the master license agreement between Canopy Growth and Alimentation Couche-Tard Inc. with respect to the use of the Tweed brand for brick-and-mortar retail stores operating in Ontario has also been terminated.
Canopy Growth will continue to own and operate the Tweed brand, including a vast portfolio of mainstream flower, pre-rolled, and ready-to-enjoy options, as the Company looks towards providing Canadians with new ways to engage with one of the industry’s highest impact brands.

About Canopy Growth Corporation

Canopy Growth (TSX: WEED) (NASDAQ:CGC) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high-quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States, and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional hemp-derived CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information, visit www.canopygrowth.com.

Notice Regarding Forward-Looking Information

This news release contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Often, but not always, forward-looking statements and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. Examples of such statements and uncertainties include statements with respect to the closing of the OEGRC Transaction; the closing of the FOUR20 Transaction; the anticipated benefits and cost savings resulting from the OEGRC Transaction and the FOUR20 Transaction; and expectations for other economic, business, and/or competitive factors.
Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including inherent uncertainty associated with projections; the diversion of management time on issues related to the OEGRC Transaction and the FOUR20  Transaction; expectations regarding future investment, growth and expansion of operations; regulatory and licensing risks; changes in general economic, business and political conditions, including changes in the financial and stock markets and the impacts of increased rates of inflation; legal and regulatory risks inherent in the cannabis industry, including the global regulatory landscape and enforcement related to cannabis, political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry; and such other risks contained in the public filings of the Company filed with Canadian securities regulators and available under the Company’s profile on SEDAR at www.sedar.com and with the United States Securities and Exchange Commission through EDGAR at www.sec.gov/edgar, including the Company’s annual report on Form 10-K for the year ended March 31, 2022.
In respect of the forward-looking statements and information, the Company has provided such statements and information in reliance on certain assumptions that they believe are reasonable at this time. Although the Company believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. Should one or more of the foregoing risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake any obligation to publicly update such forward-looking information or forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws. 
SOURCE Canopy Growth Corporation

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Canopy Growth Corporation Reports First Quarter Fiscal Year 2023 Financial Results

Canopy Growth Corporation Reports First Quarter Fiscal Year 2023 Financial Results

Continued progress of premiumization strategy and record quarter from BioSteel accelerating path to profitability 
SMITHS FALLS, ON, August 5, 2022 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the first quarter ended June 30, 2022. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
Highlights

  • Q1 FY2023 net revenue was flat compared to Q4 FY20221.  
  • Company maintained #1 share of combined premium flower and pre-rolled joint (“PRJ”) segment in Q1 FY20232
  • Increased share of the combined mainstream flower and PRJ segment by 35 bps to 4.0% in Q1 FY2023. 
  • International medical cannabis net revenue approximately doubled versus Q1 FY2022 driven primarily by strong sales in Israel and Australia.
  • Record BioSteel revenues in Q1 FY2023 increased 169% versus Q1 FY2022. Secured retail agreement with Walmart Stores covering 2,200 stores in 39 states. Entered partnership to become the Official Hydration Partner of the NHL and NHLPA. 
  • Cost reduction program on track with operating expenses3 in Q1 FY2023 decreasing by 13% versus Q1 FY2022.

“Through advancements in our North American brand led strategy we delivered a record quarter from BioSteel and maintained #1 share in the premium flower and pre-rolled joint segment, while driving growth of our premium Doja and mainstream Tweed brands. As our U.S. THC ecosystem continues to strengthen with Acreage operating in the recreational cannabis market in New Jersey, along with the expansion of Wana across North America, we remain focused on delivering a robust pipeline of innovation aligned to what consumers are looking for – premium, infused, and ready to enjoy.”
David Klein, Chief Executive Officer
“The cost saving program announced earlier in the quarter combined with sound expense discipline contributed to a meaningful decline in operating expenses during the quarter. We expect cost savings to ramp in the second half of the year, enabling us to execute on our path to profitability even as we continue to invest in strategic growth initiatives including in BioSteel and our U.S. THC ecosystem.”  
Judy Hong, Chief Financial Officer
First Quarter Fiscal 2023 Financial Summary

(in millions of Canadian dollars, unaudited)


Net Revenue
Gross margin percentage
Adjusted gross margin percentage4
Net loss5
Adjusted EBITDA6
Free cash flow7
















Reported


$110.1
(1 %)
2 %
$(2,087,556)
$(74,800)
$(142,808)

vs. Q1 FY2022


(19 %)
(2,100) bps
(1,900) bps
(635 %)
(18 %)
23 %


1
On an organic basis, excluding C3.

2
Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company’s internal proprietary market share tool that utilizes point of sales data supplied by third-party data providers, government agencies and our own retail store operations across the country.

3
Non-GAAP measure. Excludes Asset Impairment and Restructuring costs, and Acquisition-Related costs.

4
Adjusted gross margin is a non-GAAP measure, and for Q1 FY2023 excludes $4.0 million of restructuring costs recorded in cost of goods sold (Q1 FY2022 – excludes $1.4 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis and $nil of restructuring costs recorded in cost of goods sold). See “Non-GAAP Measures”.

5
Net loss includes a non-cash goodwill impairment of $1,725 million related to our cannabis operations reporting unit.  This impairment represents the full goodwill balance associated with the cannabis operations reporting unit and was triggered as a result of the decrease in the Company’s market capitalization in Q1 FY2023.

6
Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.

7
Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.

Revenues:
Net revenue of $110 million in Q1 FY2023 declined 19% versus Q1 FY2022. Total global cannabis net revenue of $66 million in Q1 FY2023 represented a decline of 29% over Q1 FY2022 driven in part by a decline in value flower sales in the Canadian recreational cannabis market due to a deliberate business transition to focus on higher margin, premium and mainstream products. Other consumer products revenue of $44 million in Q1 FY2023, represented an increase of 1% over Q1 FY2022. Excluding the impact from acquired businesses and divestiture of C3, net revenue declined 17% and global cannabis net revenue declined 28% versus Q1 FY2022.
Gross margin:
Reported gross margin in Q1 FY2023 was (1%) as compared to 20% in Q1 FY2022. Excluding non-cash restructuring costs recorded in COGS of $4 million, adjusted gross margin was 2%. Gross margin in Q1 FY2023 was further impacted by lower production output and price compression in the Canadian recreational business, a shift in business mix, and a decrease in the amount of payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program.
Operating expenses:
Total SG&A (“SG&A”) expenses in Q1 FY2023 declined by 8% versus Q1 FY2022, driven by year-over-year reductions in General & Administrative and Research and Development expenses, offset by increases in Sales and Marketing. 
Goodwill impairment:
The Company recognized a non-cash goodwill impairment of $1,725 million related to our cannabis operations reporting unit which is included in our quarterly net loss.  This impairment represents the full goodwill balance associated with the cannabis operations reporting unit and was triggered as a result of the decrease in the Company’s market capitalization in Q1 FY2023.
Net Loss:
Net Loss in Q1 FY2023 was $2,088 million, which is a $2,478 million increase in the net loss versus Q1 FY2022, driven primarily by the non-cash $1,725 million impairment in goodwill, and non-cash fair value changes.  
Adjusted EBITDA:
Adjusted EBITDA loss in Q1 FY2023 was $75 million, an $11 million increase in Adjusted EBITDA loss versus Q1 FY2022 primarily driven by the decline in gross margin, partially offset by the reduction in our total SG&A expenses.
Free Cash Flow:
Free Cash Flow in Q1 FY2023 was an outflow of $143 million, a 23% decrease in outflow versus Q1 FY2022. Relative to Q1 FY2022, the Free Cash Flow outflow decrease reflects a decrease in the cash used for operating activities and optimizing our capital expenditures as part of the previously-noted restructuring actions.
Cash Position:
Cash and short-term investments amounted to $1.2 billion at June 30, 2022, representing a decrease of $0.2 billion from $1.4 billion at March 31, 2022 reflecting primarily EBITDA losses, and the upfront payment made as consideration for the options to acquire Jetty Extracts upon federal permissibility of THC in the U.S.

Business Highlights

Strong brand performance and innovation are helping stabilize market share in core segments of the Canadian recreational cannabis market

  • Maintained Canopy Growth’s #1 share in combined premium flower and PRJ segment in Q1 FY2023. With a continued focus on premium NPD, Canopy launched 11 new premium flower and PRJ products in Q1 FY2023 which resulted in brand share of Doja in the premium flower and PRJ segment increasing 13 bps to 2.1%.
  • Maintained share in the combined mainstream flower and PRJ segment with the introduction of 6 new mainstream flower and PRJ offerings in Q1 FY2023. Strong consumer demand for new flower strains increased the Tweed brand’s share of the combined mainstream flower and PRJ segment by 35 bps to 4.0% in Q1 FY2023. 
  • Consumer demand for new Ready-to-Drink (“RTD”) beverage flavour extensions under the Deep Space and Tweed brand banners helped increase the Company’s share of RTD beverage category by 33 bps to 23%. The Deep Space brand maintained its #2 rank in the over 5 mg THC beverage category. Strong consumer demand for the Tweed portfolio of Iced Tea and Fizz beverages increased the Tweed brand’s share of the RTD beverage market by 136 bps to 10.4% and maintained the brand’s #1 market share rank in the under 5 mg THC beverage category.
  • Robust NPD pipeline including a combined 26 premium and mainstream flower and PRJ offerings expected in Q2 FY2023 secured 60 new listings across Alberta, Ontario and Quebec.

Medical cannabis revenues increasing, with multiple potential growth drivers

  • International medical cannabis net revenue doubled versus Q1 FY2022 driven primarily by strong sales in Israel and Australia. Sales force in Germany focused on expanding pharmacy network.  
  • Critical focus of Canadian medical cannabis business on increasing veteran registrations through the Spectrum Veteran Care program.

Gains in distribution and sales velocity of BioSteel RTD drove record revenue in Q1 FY2023

  • BioSteel revenue in Q1 FY2023 increased 169% versus Q1 FY2022 with BioSteel RTDs achieving 21% ACV8, up from 3% in Q1 FY2022.  Agreement secured with Walmart for product to blanket 2,200 stores across 39 states.
  • BioSteel entered partnership to become the Official Hydration Partner of the NHL and NHLPA.  Sponsorship will provide the BioSteel brand with league-wide rink side marketing and product supply rights, retail activation rights, community engagement platforms, player marketing and activation rights.

U.S. THC Ecosystem continues to strengthen

  • Wana9 continued their North American expansion by entering Puerto Rico and Arkansas in addition to opening three additional states. Building on the success of its Optimals line, including Wana Optimals Fast Asleep, which ranks as the No. 1 Quick onset sleep gummie in North America, Wana has added a variety of new SKUs to a range of markets. 
  • Acreage Holdings10 made strong progress in the first quarter of calendar 2022 with revenue increasing 48% year over year and delivered their 5th consecutive quarter of positive Adjusted EBITDA.  In April 2022, Acreage commenced adult-use operations in New Jersey with their flagship brand, The Botanist, now available for adult-use consumers in multiple dispensaries in the state.


8
IRI data for the 4 weeks ended June 12, 2022.

9
Until such time as the Company elects to exercise its rights to acquire Wana Brands, the Company will have no direct or indirect economic or voting interests in Wana Brands, the Company will not directly or indirectly control Wana Brands, and the Company, on the one hand, and Wana Brands, on the other hand, will continue to operate independently of one another.

10
Until such time as the Company elects to exercise its rights to acquire Acreage Holdings, the Company will have no direct or indirect economic or voting interests in Acreage Holdings, the Company will not directly or indirectly control Acreage Holdings, and the Company, on the one hand, and Acreage Holdings, on the other hand, will continue to operate independently of one another.

First Quarter Fiscal 2023 Revenue Review
Revenue by Channel

(in millions of Canadian dollars, unaudited)


Q1 FY2023
Q1 FY2022
Vs. Q1 FY2022

Canadian recreational cannabis







Business to business11


$26.6
$42.7
(38 %)

Business to consumer


$12.4
$17.3
(28 %)





$39.0
$60.0
(35 %)

Canadian medical cannabis12


$13.4
$13.5
(1 %)





$52.4
$73.5
(29 %)

International and other







C3


$-
$11.4
(100 %)

Other13


$13.8
$8.0
73 %





$13.8
$19.4
(29 %)

Global cannabis net revenue


$66.2
$92.9
(29 %)

Other consumer products







Storz & Bickel


$15.6
$24.1
(35 %)

This Works


$5.5
$6.5
(15 %)

BioSteel14


$17.9
$6.7
169 %

Other


$4.9
$6.0
(18 %)

Other consumer products revenue


$43.9
$43.3
1 %

Net revenue


$110.1
$136.2
(19 %)


11
For Q1 FY2023, amount is net of excise taxes of $11.6 million and other revenue adjustments of $0.6 million (Q1 FY2022 – $17.8 million and $3.0 million, respectively).

12
For Q1 FY2023, amount is net of excise taxes of $1.2 million (Q1 FY2022 – $1.4 million).

13
For Q1 FY2023, amount reflects other revenue adjustments of $0.6 million (Q1 FY2022 – $0.4 million).

14
For Q1 FY2023, amount reflects other revenue adjustments of $1.7 million (Q1 FY2022 – $1.9 million).

Revenue by Form

(in millions of Canadian dollars, unaudited)


Q1 FY2023
Q1 FY2022
Vs. Q1 FY2022

Canadian recreational cannabis







Dry bud15,16


$38.6
$66.0
(42 %)

Oils and softgels15,16


$5.2
$5.7
(9 %)

Beverages, edibles, topicals and vapes15,16


$7.4
$9.1
(19 %)

Other revenue adjustments16


$(0.6)
$(3.0)
80 %

Excise taxes


$(11.6)
$(17.8)
35 %





$39.0
$60.0
(35 %)

Medical cannabis and other17







Dry bud


$14.2
$9.6
48 %

Oils and soft gels


$9.2
$20.5
(55 %)

Beverages, edibles, topicals and vapes


$5.0
$4.2
19 %

Excise taxes


$(1.2)
$(1.4)
14 %





$27.2
$32.9
(17 %)

Global cannabis net revenue


$66.2
$92.9
(29 %)

Other consumer products







Storz & Bickel


$15.6
$24.1
(35 %)

This Works


$5.5
$6.5
(15 %)

BioSteel17


$17.9
$6.7
169 %

Other


$4.9
$6.0
(18 %)

Other consumer products revenue


$43.9
$43.3
1 %










Net revenue


$110.1
$136.2
(19 %)

Canadian Cannabis

  • Recreational B2B net sales in Q1 FY2023 decreased 38% over the prior year period primarily due to the continuing impacts of price compression resulting from increased competition and lower sales in the value-priced dried flower category.  These factors were partially offset by a more favourable product mix due primarily to a decrease in the volume of value-priced dried product sold compared to the prior year and a full quarter of net revenue contribution from Supreme Cannabis.
  • Recreational B2C net sales in Q1 FY2023 decreased 28% versus Q1 FY2022 largely driven by increased competition from the rapid increase in third party retail locations across provinces.
  • Medical net revenue in Q1 FY2023 decreased 1% from Q1 FY2022 driven primarily by higher average order sizes offset by a fewer number of orders.

International Cannabis

  • C3 revenue in Q1 FY2023 decreased 100% year-over-year as a result of the divestiture that was completed on January 31, 2022.
  • Other revenue in Q1 FY2023 increased 73% over the prior year period primarily due to bulk cannabis sales by Supreme Cannabis into the Israel medical cannabis market and increasing global medical sales including to Australia.

Other Consumer Products

  • BioSteel sales in Q1 FY2023 increased 169% over Q1 FY2022 in part due to continued growth in our distribution channels and sales velocities across North America and higher international sales.  
  • Storz & Bickel vaporizer revenue in Q1 FY2023 decreased 35% over Q1 FY2022 due primarily to temporary disruptions with certain distributors and slowdown in consumer spending in North America and Europe.
  • This Works sales in Q1 FY2023 decreased 15% over Q1 FY2022 due in part to softer performance of certain product lines, which benefited during the period of COVID-19 restrictions in Q1 FY2022 and the phasing of orders for certain products in Europe to Q2 FY2023.

The Q1 FY2023 and Q1 FY2022 financial results presented in this press release have been prepared in accordance with U.S. GAAP.


15
Excludes the impact of other revenue adjustments.

16
Other revenue adjustments represent the Company’s determination of returns and pricing adjustments and relate to the Canadian recreational business‐to‐business channel.

17
Includes the impact of other revenue adjustments, which represent the Company’s determination of returns and other pricing adjustments.

Webcast and Conference Call Information
The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, CFO at 10:00 AM Eastern Time on August 5, 2022.
Webcast Information
A live audio webcast will be available at https://app.webinar.net/bXk1q7d6DRl
Replay Information
A replay will be accessible by webcast until 11:59 PM ET on November 5, 2022 at https://app.webinar.net/bXk1q7d6DRl
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. Asset impairments related to periodic changes to the Company’s supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company’s Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission (“SEC”).
Free Cash Flow is a non- GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC.
Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted Gross Margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted Gross Margin Percentage is calculated as Adjusted Gross Margin divided by net revenue. The Adjusted Gross Margin and Adjusted Gross Margin Percentage reconciliation is presented within this news release.
About Canopy Growth Corporation
Canopy Growth (TSX:WEED,NASDAQ:CGC ) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States, and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit www.canopygrowth.com.
Notice Regarding Forward Looking Statements
This press release contains “forward-looking statements” within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements include, but are not limited to, statements with respect to:

  • the uncertainties associated with the COVID-19 pandemic, including our ability, and the ability of our suppliers and distributors, to effectively manage the restrictions, limitations and health issues presented by the COVID-19 pandemic, the ability to continue our production, distribution and sale of our products and the demand for and use of our products by consumers, disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending;
  • laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to U.S. hemp (including CBD) products and the scope of any regulations by the U.S. Food and Drug Administration (the “FDA”), the U.S. Drug Enforcement Administration (the “DEA”), the U.S. Federal Trade Commission (the “FTC”), the U.S. Patent and Trademark Office (the “USPTO”), the U.S. Department of Agriculture (the “USDA”) and any state equivalent regulatory agencies over U.S. hemp (including CBD) products;
  • expectations regarding the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill.
  • expectations related to our announcement of certain restructuring actions (the “Restructuring Actions”) and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto.
  • our ability to refinance debt as and when required on terms favorable to us and comply with covenants contained in our debt facilities and debt instruments.
  • expectations regarding the laws and regulations and any amendments thereto relating to the U.S. hemp industry in the U.S., including the promulgation of regulations for the U.S. hemp industry by the USDA and relevant state regulatory authorities.
  • expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, strategic alliances, equity investments and dispositions;
  • the amended plan of arrangement with Acreage Holdings, Inc., including the consummation of such acquisition.
  • the definitive agreements with Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (each, a “Wana Entity”), including the consummation of the acquisition of each Wana Entity.
  • the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;
  • our international activities and joint venture interests, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact.
  • our ability to successfully create and launch brands and further create, launch and scale cannabis-based products and U.S. hemp-derived consumer products in jurisdictions where such products are legal and that we currently operate in.
  • the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids.
  • the anticipated benefits and impact of the investments in us (the “CBI Group Investments”) from Constellation Brands, Inc. (“CBI”) and its affiliates (together, the “CBI Group”).
  • the potential exercise of the warrants held by the CBI Group, pre-emptive rights and/or top-up rights held by the CBI Group, including proceeds to us that may result therefrom.
  • expectations regarding the use of proceeds of equity financings, including the proceeds from the CBI Group Investments.
  • the legalization of the use of cannabis for medical or recreational in jurisdictions outside of Canada, the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized.
  • our ability to execute on our strategy and the anticipated benefits of such strategy.
  • the ongoing impact of the legalization of additional cannabis product types and forms for recreational use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets.
  • the ongoing impact of developing provincial, territorial and municipal regulations pertaining to the sale and distribution of cannabis, the related timing and impact thereof, as well as the restrictions on federally regulated cannabis producers participating in certain retail markets and our intentions to participate in such markets to the extent permissible.
  • the timing and nature of legislative changes in the U.S. regarding the regulation of cannabis including tetrahydrocannabinol (“THC”).
  • the future performance of our business and operations.
  • our competitive advantages and business strategies.
  • the competitive conditions of the industry.
  • the expected growth in the number of customers using our products.
  • our ability or plans to identify, develop, commercialize or expand our technology and research and development initiatives in cannabinoids, or the success thereof.
  • expectations regarding revenues, expenses and anticipated cash needs.
  • expectations regarding cash flow, liquidity and sources of funding.
  • expectations regarding capital expenditures.
  • the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses.
  • the expected growth in our growing, production and supply chain capacities.
  • expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations.
  • expectations with respect to future production costs.
  • expectations with respect to future sales and distribution channels and networks.
  • the expected methods to be used to distribute and sell our products.
  • our future product offerings.
  • the anticipated future gross margins of our operations.
  • accounting standards and estimates.
  • expectations regarding our distribution network.
  • expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements; and
  • expectations on price changes in cannabis markets.

Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management’s perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.
By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the “SEC”) and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products; consumer demand for cannabis and U.S. hemp products; our limited operating history; inflation risks; the risks and uncertainty regarding future product development; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; the risk that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; the implementation and effectiveness of key personnel changes; the risks that our Restructuring Actions will not result in the expected cost savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel; risks associated with jointly owned investments; risks relating to our current and future operations in emerging markets; future levels of revenues and the impact of increasing levels of competition; risks related to the protection and enforcement of our intellectual property rights; our ability to manage disruptions in credit markets or changes to our credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; risks related to stock exchange restrictions; risks associated with divestment and restructuring; volatility in and/or degradation of general economic, market, industry or business conditions; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; third-party transportation risks; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to our business and products; and the factors discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.
Schedule 1

CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars, except number of shares and per share data, unaudited)





June 30, 2022


March 31, 2022

ASSETS

Current assets:







Cash and cash equivalents


$769,495


$776,005

Short-term investments


447,620


595,651

Restricted short-term investments


12,177


12,216

Amounts receivable, net


96,626


96,443

Inventory


205,513


204,387

Prepaid expenses and other assets


62,141


52,700

Total current assets


1,593,572


1,737,402

Other financial assets


602,229


800,328

Property, plant and equipment


926,369


942,780

Intangible assets


242,479


252,695

Goodwill


138,419


1,866,503

Other assets


14,459


15,342

Total assets


$3,517,527


$5,615,050










LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:







Accounts payable


$64,647


$64,270

Other accrued expenses and liabilities


59,913


75,278

Current portion of long-term debt


193,072


9,296

Other liabilities


86,776


64,054

Total current liabilities


404,408


212,898

Long-term debt


1,264,645


1,491,695

Deferred income tax liabilities


14,658


15,991

Liability arising from Acreage Arrangement





47,000

Warrant derivative liability


1,555


26,920

Other liabilities


149,341


190,049

Total liabilities


1,834,607


1,984,553

Commitments and contingencies







Redeemable noncontrolling interest


37,150


36,200

Canopy Growth Corporation shareholders’ equity:







Common shares – $nil par value; Authorized – unlimited number of shares;    Issued – 417,217,611 shares and 394,422,604 shares, respectively


7,601,570


7,482,809

Additional paid-in capital


2,515,453


2,519,766

Accumulated other comprehensive loss


(21,554)


(42,282)

Deficit


(8,454,214)


(6,370,337)

Total Canopy Growth Corporation shareholders’ equity


1,641,255


3,589,956

Noncontrolling interests


4,515


4,341

Total shareholders’ equity


1,645,770


3,594,297

Total liabilities and shareholders’ equity


$3,517,527


$5,615,050

Schedule 2

CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of Canadian dollars, except number of shares and per share data, unaudited)














Three months ended June 30,





2022


2021

Revenue


$122,862


$155,423

Excise taxes


12,747


19,214

Net revenue


110,115


136,209

Cost of goods sold


111,507


108,971

Gross margin


(1,392)


27,238

Operating expenses:







Selling, general and administrative expenses


103,413


112,574

Share-based compensation


5,439


13,126

Asset impairment and restructuring costs


1,727,985


89,249

Total operating expenses


1,836,837


214,949

Operating loss


(1,838,229)


(187,711)

Loss from equity method investments





(100)

Other income (expense), net


(245,578)


580,666

(Loss) income before income taxes


(2,083,807)


392,855

Income tax expense


(3,749)


(2,900)

Net (loss) income


(2,087,556)


389,955

Net loss attributable to noncontrolling interests and    redeemable noncontrolling interest


(4,408)


(2,463)

Net (loss) income attributable to Canopy Growth Corporation


$(2,083,148)


$392,418










Basic (loss) earnings per share


$(5.23)


$1.02

Basic weighted average common shares outstanding


398,467,568


384,055,133










Diluted (loss) earnings per share


$(5.23)


$0.84

Diluted weighted average common shares outstanding


398,467,568


404,546,243

Schedule 3

CANOPY GROWTH CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars, unaudited)














Three months ended June 30,





2022


2021

Cash flows from operating activities:







Net (loss) income


$(2,087,556)


$389,955

Adjustments to reconcile net loss to net cash used in operating activities:







Depreciation of property, plant and equipment


15,129


17,116

Amortization of intangible assets


6,722


8,016

Share of loss on equity method investments





100

Share-based compensation


5,439


13,126

Asset impairment and restructuring costs


1,726,877


81,709

Income tax expense


3,749


2,900

Non-cash fair value adjustments and charges related to    settlement of convertible senior notes


213,610


(600,922)

Change in operating assets and liabilities, net of effects from    purchases of businesses:







Amounts receivable


(183)


(4,946)

Inventory


(1,126)


(18,158)

Prepaid expenses and other assets


(9,555)


(8,804)

Accounts payable and accrued liabilities


(15,549)


(9,644)

Other, including non-cash foreign currency


1,928


(36,228)

Net cash used in operating activities


(140,515)


(165,780)

Cash flows from investing activities:







Purchases of and deposits on property, plant and equipment


(2,293)


(20,279)

Purchases of intangible assets


(606)


(833)

Redemption (purchases) of short-term investments


153,996


(346,603)

Net cash proceeds (outflows) on sale of subsidiaries


(475)


10,324

Sale of (investments in) equity method investments





56

Investment in other financial assets


(29,205)


Net cash outflow on acquisition of subsidiaries





(8,857)

Other investing activities





(8,367)

Net cash provided by (used in) investing activities


121,417


(374,559)

Cash flows from financing activities:







Proceeds from exercise of stock options


210


3,592

Repayment of long-term debt


(211)


(48,116)

Other financing activities


(1,043)


(444)

Net cash (used in) provided by financing activities


(1,044)


(44,968)

Effect of exchange rate changes on cash and cash equivalents


13,632


(9,506)

Net decrease in cash and cash equivalents


(6,510)


(594,813)

Cash and cash equivalents, beginning of period


776,005


1,154,653

Cash and cash equivalents, end of period


$769,495


$559,840

Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)





Three months ended June 30,

(in thousands of Canadian dollars except where indicated; unaudited)


2022


2021

Net revenue


$110,115


$136,209










Gross margin, as reported


(1,392)


27,238

Adjustments to gross margin:







Restructuring costs recorded in cost of good sold


3,961


Charges related to the flow-through of inventory    step-up on business combinations





1,414

Adjusted gross margin1


$2,569


$28,652










Adjusted gross margin percentage1


2 %


21 %

1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See “Non-GAAP Measures”.

Schedule 5
Adjusted EBITDA1 Reconciliation (Non-GAAP Measure)





Three months ended June 30,

(in thousands of Canadian dollars, unaudited)


2022


2021

Net (loss) income


$(2,087,556)


$389,955

Income tax expense


3,749


2,900

Other (income) expense, net


245,578


(580,666)

Loss on equity method investments





100

Share-based compensation2


5,439


13,126

Acquisition-related costs


4,193


5,780

Depreciation and amortization2


21,851


25,132

Asset impairment and restructuring costs


1,727,985


78,618

Restructuring costs recorded in cost of goods sold


3,961


Charges related to the flow-through of inventory    step-up on business combinations





1,414

Adjusted EBITDA1


$(74,800)


$(63,641)

1Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.

2 From Consolidated Statements of Cash Flows.







Schedule 6
Free Cash Flow Reconciliation1 (Non-GAAP Measure)





Three months ended June 30,

(in thousands of Canadian dollars, unaudited)


2022


2021

Net cash used in operating activities


$(140,515)


$(165,780)

Purchases of and deposits on property, plant and equipment


(2,293)


(20,279)

Free cash flow1


$(142,808)


$(186,059)

1Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.

Schedule 7
Segmented Gross Margin Reconciliation





Three months ended June 30,

(in thousands of Canadian dollars, unaudited)


2022


2021

 Global cannabis segment







 Net revenue


$66,196


$92,939

 Cost of goods sold


81,668


79,570

 Gross margin


(15,472)


13,369

 Gross margin percentage


(23 %)


14 %










 Other consumer products segment







 Revenue


$43,919


$43,270

 Cost of goods sold


29,839


29,401

 Gross margin


14,080


13,869

 Gross margin percentage


32 %


32 %

Schedule 8
Segmented Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)





Three months ended June 30,

(in thousands of Canadian dollars except where indicated; unaudited)
2022


2021

Global cannabis segment







Net revenue


$66,196


$92,939










Gross margin, as reported


(15,472)


13,369

Adjustments to gross margin:







Restructuring costs recorded in cost of good sold


3,300


Charges related to the flow-through of inventory    step-up on business combinations





1,414

Adjusted gross margin1


$(12,172)


$14,783










Adjusted gross margin percentage1


(18 %)


16 %










Other consumer products segment







Revenue


$43,919


$43,270










Gross margin, as reported


14,080


13,869

Adjustments to gross margin:







Restructuring costs recorded in cost of good sold


661


Adjusted gross margin1


$14,741


$13,869










Adjusted gross margin percentage1


34 %


32 %

1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See “Non-GAAP Measures”.

SOURCE Canopy Growth Corporation

.

Canopy Growth Announces New Premium Flower Line-up Perfect for Summer Staycations and Weekends Away

Canopy Growth Announces New Premium Flower Line-up Perfect for Summer Staycations and Weekends Away

Leveraging insights that 85% of cannabis consumers consider product quality to be an important factor in their purchasing decision,1 the Company is releasing a range of new, premium flower offerings throughout the summer from 7ACRES and Doja, two premium brands renowned for their commitment to producing high quality cannabis. With these new releases, Canopy expands its premium flower options that deliver on the quality, genetics, and innovation that cannabis connoisseurs demand.

Grown by enthusiasts, for enthusiasts, 7ACRES is committed to producing the best premium cannabis for the community and is continuously focused on updating and innovating cultivation and improving processing techniques, with each harvest striving for better aroma, appearance, size, and flavour. The brand’s spirit of continuous improvement was evident in its early-summer release of Jack Haze Bubble Hash Infused pre-roll joints, the brand’s first in this format. The latest releases from 7ACRES include 7ACRES Platinum Kush Breath, a new 3.5g dried flower offering with a unique aroma and flavour profile, and a new infused pre-rolled joint offering made with 7ACRES Papaya flower and bubble hash.
Doja, a top-selling brand born in British Columbia and known for its premium, hand-crafted flower, cultivates cannabis using methods true to its decades-long legacy of growing in BC’s Okanagan Valley. One of its top-selling strains, Doja 91K, recently became available in 14g, the brand’s first-ever large format premium offering for the recreational market, driven by high customer demand. The latest releases from Doja include three new 3.5g flower offerings with high potency and flavourful aroma: Doja OG Deluxe, Doja Fresh Biscotti, and Doja Okanagan Grown Blackberry Cream.”Cannabis connoisseurs know what they want: premium products that over-deliver on aroma and flavour, while still hitting the THC mark,” said Julian Cohen, Chief Innovation Officer at Canopy Growth. “Our focus on innovation allows us to give consumers the enhanced quality attributes and range of products they’re looking for. As Canadians from coast-to-coast prepare for the long weekend, we’re excited to offer them new premium options to enjoy at home or at their favourite summer destination.”Canopy Growth’s new premium flower offerings will arrive in retail cannabis locations and on eCommerce sites across Canada throughout the summer, with select products available in certain regions and for a limited time only. A full product list with descriptions can be found below.

  • 7ACRES Platinum Kush Breath 3.5g: 7ACRES Platinum Kush Breath is a high THC, high terpene indica-dominant hybrid with a beautiful dense bud structure and abundant trichome coverage. This cultivar exhibits a flavourful and complex aromatic profile of sweet lemon, fruity berry, funky earth, and a hint of black pepper.
  • 7ACRES Papaya Bubble Hash Infused Pre-Rolled Joints (1g): 7ACRES Papaya Bubble Hash Infused Pre-Rolls are made using an infusion of Papaya bubble hash to deliver a pre-roll with boosted potency and increased flavour for an elevated smoking experience. This infusion emboldens Papaya’s tropical flavour profile of exotic fruits and earthy spice.
  • Doja OG Deluxe 3.5g: Doja OG Deluxe is a high THC hybrid strain bred from a unique lineage of OGKB x Triangle Kush crossed with Triangle Kush x Josh D OG. This cultivar’s terpene profile is highlighted by dominant amounts of terpinolene and caryophyllene. This strain emits a fruity, gassy, and spicy aroma profile with heavy OG characteristics.
  • Doja Fresh Biscotti 3.5g: Doja Fresh Biscotti is an exotic hybrid strain created by crossing Fresh Water Taffy and Biscotti Sundae. This cultivar is known to have a hoppy, citrusy, and peppery aroma, with the dominant terpenes including myrcene and caryophyllene.
  • Doja Okanagan Grown Blackberry Cream 3.5g (exclusive to British Columbia): Doja Okanagan Grown Blackberry Cream is an exotic indica-dominant cross of Blackberry Kush and Cookies N Cream. This cultivar is known to produce purple-toned buds with amber pistils. This high-THC cultivar features a sweet, blackberry and creamy aroma profile.

About Canopy Growth
Canopy Growth (TSX: WEED) (NASDAQ: CGC) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, Canopy Growth offers product varieties in high-quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Canopy Growth’s global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through Canopy Growth’s award-winning Tweed and Tokyo Smoke banners, Canopy Growth reaches its adult-use consumers and has built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States, and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional hemp derived CBD products to the United States through its First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. 
Notice Regarding Forward-Looking Information 
This press release contains “forward-looking statements” and “forward-looking information” within the meaning of applicable U.S. and Canadian securities laws (collectively, “forward-looking statements”), which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive risks, financial results, results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. A discussion of some of the material factors applicable to Canopy Growth Corporation (“Canopy”) can be found under the section entitled “Risk Factors” in Canopy’s Annual Report on Form 10-K for the year ended March 31, 2022, filed with the Securities and Exchange Commission and with applicable Canadian securities regulators, as such factors may be further updated from time to time in its periodic filings with the Securities and Exchange Commission and with applicable Canadian securities regulators, which can be accessed at www.sec.gov/edgar and www.sedar.com, respectively. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the filings. Any forward-looking statement included in this press release is made as of the date of this press release and, except as required by law, Canopy disclaims any obligation to update or revise any forward-looking statement. Readers are cautioned not to put undue reliance on any forward-looking statement. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement. 1 CGC Internal Data, 2021 Canada Shopper JourneySOURCE Canopy Growth CorporationFor further information: Media Contact: Katie Windley, [email protected]; Investor Contact: Tyler Burns, Director, Investor Relations, [email protected]
.

Canopy Growth Corporation Reports Fourth Quarter and Fiscal year 2022 Financial Results

Canopy Growth Corporation Reports Fourth Quarter and Fiscal year 2022 Financial Results

Company Advances Premium Brand Driven Strategy, Laying a Foundation for Long-Term Sustainable Growth and Profitability
SMITHS FALLS, ON, May 27, 2022 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the fourth quarter and fiscal year ended March 31, 2022. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
Highlights

  • The Company progressed its leading North American brand driven strategy with Canopy Growth entering into plans to acquire Wana Brands, the #1 cannabis edibles brand in North America, and Jetty Extracts (“Jetty”), a top 10 Cannabis brand in California, adding to the robust brand portfolio.
  • Premium brands gained ground with Canadian consumers with Company maintaining #1 share of premium flower category throughout FY20221, led by in demand offerings from Doja, 7ACRES and 7ACRES Collective brands; and improved market share performance in the mainstream flower category in Q4 FY2022 with the Tweed rebrand and new Tweed product offerings in flower and beverages.
  • Storz & Bickel posted 22nd year of consecutive revenue growth in FY2022; strong consumer demand for Storz & Bickel vaporizers including the new VOLCANO ONYX and MIGHTY+ drove 21% increase in revenue in Q4 FY2022 versus Q4 FY2021.
  • Increased distribution of BioSteel hydration products drove year-over-year revenue growth in FY2022 of 56% versus FY2021. Focusing strategic investments to accelerating brand growth with aspiration to be top 4 player in the North American sports drink market.
  • The Company generated Net revenue of $520 million in FY2022, representing a decline of 5% versus FY2021.
  • Through restructuring actions that were previously announced on April 26, 2022, management expects to generate COGS savings of $30$50 million and SG&A expense reductions of $70$100 million, both within 12 to 18 months.

“Canopy Growth is building the industry’s leading portfolio of premium brands across North America. We’ve taken concrete steps to advance this ambition by strengthening our positioning in Canada, and further bolstering our U.S. THC ecosystem through the addition of two high performance brands in Wana Brands and Jetty Extracts. In the fiscal year ahead, we will remain focused on growing our market share in the key segments that will drive profitable growth and continuing to scale our premium brands across North America.”
David Klein, Chief Executive Officer
“Achieving profitability is critical and we have undertaken additional initiatives to streamline and drive efficiencies for our global cannabis business.  In FY2023, we are focused on executing our path to profitability in Canada, while we continue to invest in high potential opportunities – particularly in BioSteel, and further developing our U.S. THC ecosystem, which we believe remains significantly under-appreciated by the market.”
Judy Hong, Chief Financial Officer


1 Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company’s internal proprietary market share tool that utilizes point of sales data supplied by a third-party data provider, government agencies and our own retail store operations across the country. The tool captures point of sale data from an average of 28% of stores in Alberta, British Columbia, Saskatchewan, Manitoba and Newfoundland & Labrador, point of sale data from 100% of stores in New Brunswick, Nova Scotia, Prince Edward Island and Quebec, as well as depletions and e-commerce sales data from the OCS.

FY2023 Priorities & Outlook
With the foundation for long-term sustainable growth in place, Canopy Growth is committed to further advancing the Company’s aspiration to become the leading premium cannabis branded company in North America.
In FY2023, Canopy will focus on:

  • Strengthening our market position in premium segments in Canada – driven by our flower cultivation strategy, delivering flower with in-demand attributes under the Doja and 7ACRES brands;
  • Making strategic investments to increase distribution, brand activation and new product development in high-growth consumer packaged good (“CPG”) brands – BioSteel and Storz & Bickel;
  • Identifying opportunities to expand brands across the U.S. and within the Canadian recreational market, to fully realize the North American potential of the Canopy Growth brand portfolio; and
  • As a result of these actions, the Company expects to be Adjusted EBITDA positive in FY2024 excluding investments in BioSteel and U.S. THC.

Fourth Quarter Fiscal Year 2022 Financial Summary

(in millions of Canadian dollars, unaudited)


Net Revenue
Gross margin percentage
Adjusted gross margin percentage2
Net loss
Adjusted EBITDA3
Free cash flow4

Reported


$111.8
(142%)
(32%)
$(578.6)
$(121.8)
$(126.8)

vs. Q4 FY2021


(25%)
(14,900) bps
(4,600) bps
6%
(30%)
(2%)

Fiscal Year 2022 Financial Summary

(in millions of Canadian dollars, unaudited)


Net Revenue
Gross margin percentage
Adjusted gross margin percentage5
Net loss
Adjusted EBITDA3
Free cash flow4

Reported


$520.3
(37%)
(11%)
$(320.5)
$(415.4)
$(582.5)

vs. FY2021


(5%)
(4,900) bps
(2,800) bps
81%
(22%)
8%


2 Adjusted gross margin is a non-GAAP measure, and for Q4 FY2022 excludes $4.2 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis and $119.1 million of restructuring costs recorded in cost of goods sold (Q4 FY2021 – excludes $nil related to the flow-through of inventory step-up and $10.3 million of restructuring costs recorded in cost of goods sold). See “Non-GAAP Measures”.

3 Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.

4 Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.

5 Adjusted gross margin is a non-GAAP measure, and for FY2022 excludes $11.8 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis and $123.7 million of restructuring costs recorded in cost of goods sold (FY2021 – excludes $1.5 million related to the flow-through of inventory step-up and $26.0 million of restructuring costs recorded in cost of goods sold). See “Non-GAAP Measures”.

Fourth Quarter and Fiscal Year 2022 Financial Summary
Revenues:
Net revenue of $112 million in Q4 FY2022 declined 25% versus Q4 FY2021. Total global cannabis net revenue of $66 million in Q4 FY2022, represented a decline of 35% over Q4 FY2021. Other consumer products revenue of $46 million in Q4 FY2022, represented a decline of 3% over Q4 FY2021. Excluding the impact from acquired businesses and divestiture of C3, net revenue declined 26% and global cannabis net revenue declined 38% versus Q4 FY2021.
Net revenue of $520 million in FY2022 declined 5% versus FY2021. Total global cannabis net revenue of $337 million in FY2022, represented a decline of 11% over FY2021. Other consumer products revenue of $183 million in FY2022, represented an increase of 9% over FY2021. Excluding the impact from acquired businesses and divestiture of C3, net revenue declined 9% and global cannabis net revenue declined 19% versus FY2021.
Gross margin:
Reported gross margin in Q4 FY2022 was (142%) as compared to 7% in Q4 FY2021. Excluding non-cash restructuring costs recorded in COGS of $119 million and inventory step-up charges from acquisitions of $4 million, adjusted gross margin was (32%). Comparatively gross margin in Q4 FY2021 was impacted by restructuring charges totaling $10 million. Gross margin in Q4 FY2022 was further impacted by lower production output and price compression in the Canadian recreational business as well as higher third-party shipping, distribution and warehousing costs across North America.
Reported gross margin in FY2022 was (37%) as compared to 12% in FY2021. Excluding non-cash restructuring costs recorded in cost of goods sold of $124 million and inventory step-up charges from acquisitions of $12 million, adjusted gross margin was approximately (11%). Gross margin in FY2022 was impacted by a year-over-year decrease in net revenue and continued price compression in the Canadian recreational business, inventory write-offs driven by lower than expected demand as well as higher third-party shipping, distribution and warehousing costs across North America. Gross margin in FY2022 benefited from payroll subsidies in the amount of $24 million received from the Canadian government, pursuant to a COVID-19 relief program, compared to $6 million in FY2021.
Operating expenses:
Total SG&A (“SG&A”) expenses in Q4 FY2022 declined by 21% versus Q4 FY2021, driven by year-over-year reductions in General & Administrative (“G&A”) and Research and Development (“R&D”) expenses. G&A expenses declined 38% year-over-year primarily due to reductions in staffing, professional fees, executive compensation and employee bonus, and continued cost reductions, partially offset by lower payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program, relative to the prior year. R&D expenses declined 45% year-over-year principally due to a more disciplined approach to R&D investments and the closure of certain R&D facilities in the prior year. Sales & Marketing (“S&M”) expenses were flat year-over-year.
Total SG&A expenses in FY2022 declined by 18% versus FY2021, driven by year-over-year reductions in G&A and R&D expenses, partially offset by an increase in S&M expenses. G&A expenses declined 46% year-over-year primarily due to reductions in staffing, professional fees, executive compensation and employee bonus, and continued cost reductions. R&D expenses declined 44% year-over-year principally due to a more disciplined approach to R&D investments and the closure of certain R&D facilities in the prior year. S&M expenses increased 23% year-over-year primarily due to a return to more normal advertising and promotional spending in fiscal 2022. S&M expenses was further driven by higher sponsorship fees associated with BioSteel and increased sales and marketing costs associated with the acquisitions of Supreme Cannabis and Ace Valley.
Net Loss:
Net Loss in Q4 FY2022 was $579 million, which is a $38 million improvement versus Q4 FY2021, driven primarily by non-cash fair value changes, partially offset by higher non-cash asset impairment and restructuring charges.
Net Loss in FY2022 was $320 million, which is a $1,350 million improvement versus FY2021, driven primarily by non-cash fair value changes, lower operating expenses, including lower non-cash asset impairment and restructuring charges, partially offset by lower gross margins.
Adjusted EBITDA:
Adjusted EBITDA loss in Q4 FY2022 was $122 million, a $28 million increase in Adjusted EBITDA loss versus Q4 FY2021 primarily driven by lower sales and a decline in gross margins, partially offset by the reduction in our total SG&A expenses.
Adjusted EBITDA loss in FY2022 was $415 million, a $75 million increase in Adjusted EBITDA loss versus FY2021, driven primarily driven by lower sales and a decline in gross margins, partially offset by the reduction in our total SG&A expenses.
Free Cash Flow:
Free Cash Flow in Q4 FY2022 was an outflow of $127 million, a 2% increase in outflow versus Q4 FY2021. Relative to Q4 FY2021, the Free Cash Flow outflow increase reflects higher interest paid partially offset by lower capital expenditures.
Free Cash Flow in FY2022 was an outflow of $582 million, an 8% decrease in outflow versus FY2021. Relative to FY2021, the Free Cash Flow outflow decrease is due to lower S&GA expenses and reduction in capital expenditures, partially offset by higher cash interest payments.
Cash Position:
Cash and Short-term investments amounted to $1.4 billion at March 31, 2022, representing a decrease of $0.9 billion from $2.3 billion at March 31, 2021 reflecting EBITDA losses, capital investments and the upfront payment made as consideration for the option to acquire Wana Brands upon federal permissibility of THC in the U.S.
Business Highlights
Developing a robust North American brand driven strategy – In the very competitive Canadian adult-use market, the Company’s Doja, 7ACRES, 7ACRES Craft Collection, Deep Space, Tweed, and Ace Valley branded product offerings:

  • Maintained Canopy Growth’s #1 share of the premium flower market in FY2022 by leveraging established cannabis brands – Doja and 7ACRES;
  • Nearly doubled the Company’s share of the mainstream flower market in Q4 FY2022. Performance benefited from strong consumer demand for new Tweed flower strains, Chemdawg and Powdered Donuts, launched in Q3 FY2022;
  • The introduction of new beverage flavour extensions including, Tweed Iced Tea Guava and Deep Space Orange Orbit, have helped drive Tweed to the #1 market share rank in the under 5 mg THC beverage category and Deep Space is the fastest growing brand and #2 rank in the over 5 mg THC beverage category; and
  • Following investments in plans to acquire Wana Brands and Jetty Extracts, exploring avenues through which these brands can expand across the U.S. and within the Canadian recreational market, to fully realize the North American potential.

Driving Growth in our Consumer Product Brands

  • Storz & Bickel: Gains in distribution and strong consumer demand for new Storz & Bickel vaporizers including the VOLCANO ONYX and MIGHTY+ drove 21% increase in revenue in Q4 FY2022 versus Q4 FY2021.
  • BioSteel: Gains in distribution and sales velocity of BioSteel ready-to-drink (“RTD”) products drove a 56% increase in revenue in FY2022 versus FY2021; BioSteel RTDs have achieved 18% ACV7; New Grape and Cherry Lime RTD flavors began shipping in Q4 FY202
  • Martha Stewart CBD: Launched new Martha Stewart CBD Tropical Medley CBD Wellness Gummies in Q4 FY2022. Launched Martha Stewart CBD Wellness Topicals – Super Strength CBD, Sleep Science CBD and Daily De-Stress CBD Creams.

Strengthening U.S. THC ecosystem, investing in plans to acquire scalable brands in must‑win categories

  • Jetty Extracts8: Strengthened U.S. THC ecosystem with plan to acquire Jetty, a Top 5 cannabis brand9, Top 10 California vape brand9, and market leader with greater than 75% of the solventless vape market10. Plan establishes the opportunity to scale the Jetty brand to additional U.S. state markets and across the border into Canada leveraging Jetty’s industry leading intellectual property.
  • Wana Brands11: Wana strengthened its management team with the appointment of a new Chief Financial Officer and new Chief Operating Officer. In addition, the company expanded its U.S. footprint in Q4 FY2022 with the signing of license agreements covering Puerto Rico, its fourteenth license in the U.S.. At least three more markets are expected to come online by the end of CY2022. In Q4 FY2022, launched Wana Quick Spectrum Live Rosin Quick Fast-Acting Gummies in Colorado.


7 IRI data for the 4 weeks ended April 17, 2022

8 Until such time as the Company elects to exercise its rights to acquire Jetty, the Company will have no direct or indirect economic or voting interests in Jetty, the Company will not directly or indirectly control Jetty, and the Company, on the one hand, and Jetty, on the other hand, will continue to operate independently of one another.    

9 Based on March 2022 BDSA data for dollars sold for all product categories

10 Based on year-to-date BDSA data for dollars sold of rosin cartridges through March 2022

11 Until such time as the Company exercises its rights to acquire each Wana Entity, the Company will have no economic or voting interests in Wana, the Company will not control Wana, and the Company and Wana will continue to operate independently of one another.

Driving brand awareness through omni channel activations
Fourth Quarter and Fiscal Year 2022 Revenue Review
Revenue by Channel

(in millions of Canadian dollars, unaudited)


Q4 FY2022
Q4 FY2021
Vs. Q4
FY2021

FY2022
FY2021
Vs. FY2021

Canadian recreational cannabis













Business to business12


$25.8
$43.3
(40%)
$143.7
$163.6
(12%)

Business to consumer


$13.1
$17.8
(26%)
$61.6
$66.0
(7%)





$38.9
$61.1
(36%)
$205.3
$229.6
(11%)

Canadian medical cannabis13


$13.1
$13.7
(4%)
$52.6
$55.5
(5%)





$52.0
$74.8
(30%)
$257.9
$285.1
(10%)

International and other













C3


$3.1
$15.8
(80%)
$36.1
$62.3
(42%)

Other14


$10.9
$10.7
2%
$43.2
$31.3
38%





$14.0
$26.5
(47%)
$79.3
$93.6
(15%)

Global cannabis net revenue


$66.0
$101.3
(35%)
$337.2
$378.7
(11%)

Other consumer products













Storz & Bickel


$21.6
$17.9
21%
$85.4
$81.0
5%

This Works


$6.0
$8.5
(29%)
$32.3
$33.3
(3%)

BioSteel15


$13.5
$13.6
(1%)
$44.6
$28.5
56%

Other


$4.7
$7.1
(34%)
$20.8
$25.1
(17%)

Other consumer products revenue


$45.8
$47.1
(3%)
$183.1
$167.9
9%

Net revenue


$111.8
$148.4
(25%)
$520.3
$546.6
(5%)


12 For Q4 FY2022, amount is net of excise taxes of $13.2 million and other revenue adjustments of $3.3 million (Q4 FY2021 – $17.5 million and $3.1 million, respectively). For FY2022, amount is net of excise taxes of $56.7 million and other revenue adjustments of $7.3 million (FY2021 – $54.9 million and $14.0 million, respectively).

13 For Q4 FY2022, amount is net of excise taxes of $1.2 million (Q4 FY2021 – $1.4 million). For FY2022, amount is net of excise taxes of $5.2 million (FY2021 – $5.6 million).

14 For Q4 FY2022, amount reflects other revenue adjustments of $1.0 million (Q4 FY2021 – $0.3 million). For FY2022, amount reflects other revenue adjustments of $4.3 million (FY2021 – $0.7 million).

15 For Q4 FY2022, amount reflects other revenue adjustments of $3.9 million (Q4 FY2021 – $4.2 million). For FY2022, amount reflects other revenue adjustments of $9.9 million (FY2021 – $9.2 million).

Revenue by Form

(in millions of Canadian dollars, unaudited)


Q4 FY2022
Q4 FY2021
Vs. Q4
FY2021

FY2022
FY2021
Vs. FY2021

Canadian recreational cannabis













Dry bud16,17


$41.9
$67.9
(38%)
$211.7
$238.0
(11%)

Oils and softgels16,17


$5.5
$6.7
(18%)
$25.5
$28.8
(11%)

Beverages, edibles, topicals and vapes16,17


$8.0
$7.1
13%
$32.1
$31.7
1%

Other revenue adjustments17


$(3.3)
$(3.1)
(6%)
$(7.3)
$(14.0)
48%

Excise taxes


$(13.2)
$(17.5)
25%
$(56.7)
$(54.9)
(3%)





$38.9
$61.1
(36%)
$205.3
$229.6
(11%)

Medical cannabis and other18













Dry bud


$13.7
$9.7
41%
$45.4
$40.5
12%

Oils and soft gels


$11.6
$25.5
(55%)
$71.2
$101.9
(30%)

Beverages, edibles, topicals and vapes


$3.0
$6.4
(53%)
$20.5
$12.3
67%

Excise taxes


$(1.2)
$(1.4)
14%
$(5.2)
$(5.6)
7%





$27.1
$40.2
(33%)
$131.9
$149.1
(12%)

Global cannabis net revenue


$66.0
$101.3
(35%)
$337.2
$378.7
(11%)

Other consumer products













Storz & Bickel


$21.6
$17.9
21%
$85.4
$81.0
5%

This Works


$6.0
$8.5
(29%)
$32.3
$33.3
(3%)

BioSteel18


$13.5
$13.6
(1%)
$44.6
$28.5
56%

Other


$4.7
$7.1
(34%)
$20.8
$25.1
(17%)

Other consumer products revenue


$45.8
$47.1
(3%)
$183.1
$167.9
9%
















Net revenue


$111.8
$148.4
(25%)
$520.3
$546.6
(5%)

Canadian Cannabis

  • Recreational B2B net sales in Q4 FY2022 decreased 40% over the prior year period primarily due to the continued insufficient supply of flower products with in-demand attributes and continued price compression, particularly in the value-priced dried flower category. These factors were partially offset by contribution from the acquisitions of Ace Valley and Supreme Cannabis.
  • Recreational B2C net sales in Q4 FY2022 decreased 26% versus Q4 FY2021 largely driven by increased competition from the rapid increase in third party retail locations across provinces.
  • Medical net revenue in Q4 FY2022 decreased 4% from Q4 FY2021 driven primarily by higher average order sizes offset by a fewer number of orders.

International Cannabis

  • C3 revenue in Q4 FY2022 decreased 80% year-over-year as a result of the divestiture that was completed on January 31, 2022.
  • Other revenue in Q4 FY2022 increased 2% over the prior year period primarily due to bulk cannabis sales by Supreme Cannabis into the Israel medical cannabis market, offset by lower U.S. CBD sales.

Other Consumer Products

  • BioSteel sales in Q4 FY2022 decreased 1% over Q4 FY2021 in part due to shipment timing.
  • Storz & Bickel vaporizer revenue in Q4 FY2022 increased 21% over Q4 FY2021 due primarily to sales of new VOLCANO ONYX and MIGHTY+ vaporizers launched late in the second quarter of FY2022.
  • This Works sales in Q4 FY2022 decreased 29% over Q4 FY2021 due in part to lapping strong sales in the prior year.

The Q4 FY2022, FY2022, Q4 FY2021 and FY2021 financial results presented in this press release have been prepared in accordance with U.S. GAAP.


16 Excludes the impact of other revenue adjustments.

17 Other revenue adjustments represent the Company’s determination of returns and pricing adjustments, and relate to the Canadian recreational business‐to‐business channel.

18 Includes the impact of other revenue adjustments, which represent the Company’s determination of returns and other pricing adjustments.

Webcast and Conference Call Information
The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, CFO at 10:00 AM Eastern Time on May 27, 2022.
Webcast Information
A live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1540225&tp_key=a04693a9b2
Replay Information
A replay will be accessible by webcast until 11:59 PM ET on August 25, 2022 at:
https://produceredition.webcasts.com/starthere.jsp?ei=1540225&tp_key=a04693a9b2
Non-GAAP Measures
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. Asset impairments related to periodic changes to the Company’s supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission (“SEC”).
Free Cash Flow is a non- GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Company’s Annual Report on Form 10-K to be filed with the SEC.
Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted Gross Margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted Gross Margin Percentage is calculated as Adjusted Gross Margin divided by net revenue. The Adjusted Gross Margin and Adjusted Gross Margin Percentage reconciliation is presented within this news release.
About Canopy Growth Corporation
Canopy Growth (TSX:WEED,NASDAQ:CGC ) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States, and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit www.canopygrowth.com.
Notice Regarding Forward Looking Statements
This press release contains “forward-looking statements” within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements include, but are not limited to, statements with respect to:

  • the uncertainties associated with the COVID-19 pandemic, including our ability, and the ability of our suppliers and distributors, to effectively manage the restrictions, limitations and health issues presented by the COVID-19 pandemic, the ability to continue our production, distribution and sale of our products and the demand for and use of our products by consumers, disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending;
  • laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to U.S. hemp (including CBD) products and the scope of any regulations by the U.S. Food and Drug Administration (the “FDA”), the U.S. Drug Enforcement Administration (the “DEA”), the U.S. Federal Trade Commission (the “FTC”), the U.S. Patent and Trademark Office (the “USPTO”), the U.S. Department of Agriculture (the “USDA”) and any state equivalent regulatory agencies over U.S. hemp (including CBD) products;
  • expectations regarding the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;
  • expectations related to our announcement of certain restructuring actions (the “Restructuring Actions”) and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;
  • our ability to refinance debt as and when required on terms favorable to us and comply with covenants contained in our debt facilities and debt instruments;
  • expectations regarding the laws and regulations and any amendments thereto relating to the U.S. hemp industry in the U.S., including the promulgation of regulations for the U.S. hemp industry by the USDA and relevant state regulatory authorities;
  • expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, strategic alliances, equity investments and dispositions;
  • the amended plan of arrangement with Acreage Holdings, Inc., including the consummation of such acquisition;
  • the definitive agreements with Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (each, a “Wana Entity”), including the consummation of the acquisition of each Wana Entity;
  • the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;
  • our international activities and joint venture interests, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact;
  • our ability to successfully create and launch brands and further create, launch and scale cannabis-based products and U.S. hemp-derived consumer products in jurisdictions where such products are legal and that we currently operate in;
  • the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids;
  • the anticipated benefits and impact of the investments in us (the “CBI Group Investments”) from Constellation Brands, Inc. (“CBI”) and its affiliates (together, the “CBI Group”);
  • the potential exercise of the warrants held by the CBI Group, pre-emptive rights and/or top-up rights held by the CBI Group, including proceeds to us that may result therefrom or the potential conversion of the convertible senior notes issued by Canopy Growth and held by the CBI Group;
  • expectations regarding the use of proceeds of equity financings, including the proceeds from the CBI Group Investments;
  • the legalization of the use of cannabis for medical or recreational in jurisdictions outside of Canada, the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized;
  • our ability to execute on our strategy and the anticipated benefits of such strategy;
  • the ongoing impact of the legalization of additional cannabis product types and forms for recreational use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets;
  • expectations of the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;
  • the ongoing impact of developing provincial, territorial and municipal regulations pertaining to the sale and distribution of cannabis, the related timing and impact thereof, as well as the restrictions on federally regulated cannabis producers participating in certain retail markets and our intentions to participate in such markets to the extent permissible;
  • the timing and nature of legislative changes in the U.S. regarding the regulation of cannabis including tetrahydrocannabinol (“THC”);
  • the future performance of our business and operations;
  • our competitive advantages and business strategies;
  • the competitive conditions of the industry;
  • the expected growth in the number of customers using our products;
  • our ability or plans to identify, develop, commercialize or expand our technology and research and development initiatives in cannabinoids, or the success thereof;
  • expectations regarding revenues, expenses and anticipated cash needs;
  • expectations regarding cash flow, liquidity and sources of funding;
  • expectations regarding capital expenditures;
  • the expansion of our production and manufacturing, the costs and timing associated therewith and the receipt of applicable production and sale licenses;
  • the expected growth in our growing, production and supply chain capacities;
  • expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations;
  • expectations with respect to future production costs;
  • expectations with respect to future sales and distribution channels and networks;
  • the expected methods to be used to distribute and sell our products;
  • our future product offerings;
  • the anticipated future gross margins of our operations;
  • accounting standards and estimates;
  • expectations regarding our distribution network;
  • expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements; and
  • expectations on price changes in cannabis markets.

Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.
The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management’s perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; * our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.
By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the “SEC”) and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products; consumer demand for cannabis and U.S. hemp products; our limited operating history; inflation risks; the risks and uncertainty regarding future product development; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; the risk that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; the implementation and effectiveness of key personnel changes; the risks that our Restructuring Actions will not result in the expected cost savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel; risks associated with jointly owned investments; risks relating to our current and future operations in emerging markets; future levels of revenues and the impact of increasing levels of competition; risks related to the protection and enforcement of our intellectual property rights; our ability to manage disruptions in credit markets or changes to our credit ratings; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; risks related to stock exchange restrictions; risks associated with divestment and restructuring; volatility in and/or degradation of general economic, market, industry or business conditions; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; third-party transportation risks; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to our business and products; and the factors discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.
Schedule 1

CANOPY GROWTH CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands of Canadian dollars, except number of shares and per share data, unaudited)





March 31,
2022


March 31,
2021

ASSETS

Current assets:







   Cash and cash equivalents


$776,005


$1,154,653

   Short-term investments


595,651


1,144,563

   Restricted short-term investments


12,216


11,332

   Amounts receivable, net


96,443


92,435

   Inventory


204,387


367,979

   Prepaid expenses and other assets


52,700


67,232

Total current assets


1,737,402


2,838,194

Other financial assets


800,328


708,167

Property, plant and equipment


942,780


1,074,537

Intangible assets


252,695


308,167

Goodwill


1,866,503


1,889,354

Other assets


15,342


5,061

   Total assets


$5,615,050


$6,823,480










LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:







   Accounts payable


$64,270


$67,262

   Other accrued expenses and liabilities


75,278


100,813

   Current portion of long-term debt


9,296


9,827

   Other liabilities


64,054


106,428

Total current liabilities


212,898


284,330

Long-term debt


1,491,695


1,573,136

Deferred income tax liabilities


15,991


21,379

Liability arising from Acreage Arrangement


47,000


600,000

Warrant derivative liability


26,920


615,575

Other liabilities


190,049


107,240

   Total liabilities


1,984,553


3,201,660

Commitments and contingencies







Redeemable noncontrolling interest


36,200


135,300

Canopy Growth Corporation shareholders’ equity:







   Common shares – $nil par value; Authorized – unlimited number of shares;       Issued – 394,422,604 shares and 382,875,179 shares, respectively


7,482,809


7,168,557

   Additional paid-in capital


2,519,766


2,415,650

   Accumulated other comprehensive loss


(42,282)


(34,240)

   Deficit


(6,370,337)


(6,068,156)

Total Canopy Growth Corporation shareholders’ equity


3,589,956


3,481,811

Noncontrolling interests


4,341


4,709

   Total shareholders’ equity


3,594,297


3,486,520

   Total liabilities and shareholders’ equity


$5,615,050


$6,823,480

Schedule 2

CANOPY GROWTH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of Canadian dollars, except number of shares and per share data, unaudited)






















Three months ended March 31,


Years ended March 31,





2022


2021


2022


2021

Revenue


$126,123


$167,375


$582,218


$607,198

Excise taxes


14,353


18,936


61,893


60,549

   Net revenue


111,770


148,439


520,325


546,649

Cost of goods sold


271,012


138,639


713,379


479,689

   Gross margin


(159,242)


9,800


(193,054)


66,960

Operating expenses:















   Selling, general and administrative expenses


117,591


148,666


472,756


575,389

   Share-based compensation


11,669


18,517


47,525


91,149

   Expected credit losses on financial assets and related charges





1,000





109,480

   Asset impairment and restructuring costs


241,141


74,819


369,339


534,398

      Total operating expenses


370,401


243,002


889,620


1,310,416

Operating loss


(529,643)


(233,202)


(1,082,674)


(1,243,456)

   Loss from equity method investments





(11,778)


(100)


(52,629)

   Other income (expense), net


(57,428)


(366,770)


753,341


(387,876)

Loss before income taxes


(587,071)


(611,750)


(329,433)


(1,683,961)

   Income tax recovery (expense)


8,458


(4,945)


8,948


13,141

Net loss


(578,613)


(616,695)


(320,485)


(1,670,820)

   Net (loss) income attributable to noncontrolling interests and       redeemable noncontrolling interest


(3,997)


83,283


(18,304)


74,100

Net loss attributable to Canopy Growth Corporation


$(574,616)


$(699,978)


$(302,181)


$(1,744,920)


















Basic and diluted loss per share


$(1.46)


$(1.85)


$(0.77)


$(4.69)

Basic and diluted weighted average common shares outstanding


394,248,404


378,519,753


391,324,285


371,662,296

Schedule 3

CANOPY GROWTH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of Canadian dollars, unaudited)














Years ended March 31,





2022


2021

Cash flows from operating activities:







   Net loss


$(320,485)


$(1,670,820)

   Adjustments to reconcile net loss to net cash used in operating activities:







      Depreciation of property, plant and equipment


76,247


70,914

      Amortization of intangible assets


38,171


56,204

      Share of loss on equity method investments


100


52,629

      Share-based compensation


47,525


91,149

      Asset impairment and restructuring costs


332,949


519,209

      Expected credit losses on financial assets and related charges





109,480

      Income tax recovery


(8,948)


(13,141)

      Non-cash fair value adjustments


(866,739)


380,758

      Change in operating assets and liabilities, net of effects from          purchases of businesses:







         Amounts receivable


3,741


(11,994)

         Inventory


173,189


23,107

         Prepaid expenses and other assets


24,472


77

         Accounts payable and accrued liabilities


(35,844)


16,542

      Other, including non-cash foreign currency


(10,189)


(89,843)

Net cash used in operating activities


(545,811)


(465,729)

Cash flows from investing activities:







   Purchases of and deposits on property, plant and equipment


(36,684)


(164,502)

   Purchases of intangible assets


(11,429)


(9,639)

   Proceeds on sale of property, plant and equipment


27,279


45,921

   Proceeds on sale of intangible assets





18,337

   Redemption (purchases) of short-term investments


545,991


(459,834)

   Cash outflow on completion of RIV Arrangement





(152,801)

   Net cash proceeds on sale of subsidiaries


118,149


   Sale of equity method investments





7,000

   Investment in other financial assets


(379,414)


(44,721)

   Investment in Acreage Arrangement





(49,849)

   Loan advanced to Acreage Hempco





(66,995)

   Net cash outflow on acquisition of subsidiaries


(14,947)


   Other investing activities


(18,126)


(7,022)

Net cash provided by (used in) investing activities


230,819


(884,105)

Cash flows from financing activities:







   Proceeds from issuance of common shares and warrants


2,700


   Proceeds from exercise of stock options


5,567


156,897

   Proceeds from exercise of warrants





245,186

   Issuance of long-term debt





893,160

   Repayment of long-term debt


(50,763)


(15,619)

   Other financing activities


(3,037)


(14,855)

Net cash (used in) provided by financing activities


(45,533)


1,264,769

Effect of exchange rate changes on cash and cash equivalents


(18,123)


(63,458)

   Net decrease in cash and cash equivalents


(378,648)


(148,523)

   Cash and cash equivalents, beginning of period


1,154,653


1,303,176

Cash and cash equivalents, end of period


$776,005


$1,154,653

Schedule 4
Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)





Three months ended March 31,

(in thousands of Canadian dollars except where indicated; unaudited)


2022


2021

Net revenue


$111,770


$148,439










Gross margin, as reported


(159,242)


9,800

Adjustments to gross margin:







   Restructuring costs recorded in cost of good sold


119,115


10,348

   Charges related to the flow-through of inventory       step-up on business combinations


4,163


Adjusted gross margin1


$(35,964)


$20,148










Adjusted gross margin percentage1


(32%)


14%





Years ended March 31,

(in thousands of Canadian dollars except where indicated; unaudited)


2022


2021

Net revenue


$520,325


$546,649










Gross margin, as reported


(193,054)


66,960

Adjustments to gross margin:







   Restructuring costs recorded in cost of good sold


123,669


25,985

   Charges related to the flow-through of inventory       step-up on business combinations


11,847


1,494

Adjusted gross margin1


$(57,538)


$94,439










Adjusted gross margin percentage1


(11%)


17%

1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See “Non-GAAP Measures”.

Schedule 5
Adjusted EBITDA1 Reconciliation (Non-GAAP Measure)





Three months ended March 31,

(in thousands of Canadian dollars, unaudited)


2022


2021

Net loss


$(578,613)


$(616,695)

   Income tax (recovery) expense


(8,458)


4,945

   Other (income) expense, net


57,428


366,770

   Loss on equity method investments





11,778

   Share-based compensation2


11,669


18,517

   Acquisition-related costs


1,272


5,561

   Depreciation and amortization2


30,489


28,928

   Asset impairment and restructuring costs


241,141


74,819

   Expected credit losses on financial assets       and related charges





1,000

   Restructuring costs recorded in cost of goods sold


119,115


10,348

   Charges related to the flow-through of inventory       step-up on business combinations


4,163


Adjusted EBITDA1


$(121,794)


$(94,029)





Years ended March 31,

(in thousands of Canadian dollars, unaudited)


2022


2021

Net loss


$(320,485)


$(1,670,820)

   Income tax recovery


(8,948)


(13,141)

   Other (income) expense, net


(753,341)


387,876

   Loss on equity method investments


100


52,629

   Share-based compensation2


47,525


91,149

   Acquisition-related costs


11,060


13,522

   Depreciation and amortization2


114,418


127,118

   Asset impairment and restructuring costs


358,708


534,398

   Expected credit losses on financial assets       and related charges





109,480

   Restructuring costs recorded in cost of goods sold


123,669


25,985

   Charges related to the flow-through of inventory       step-up on business combinations


11,847


1,494

Adjusted EBITDA1


$(415,447)


$(340,310)

1Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”.

2 From Consolidated Statements of Cash Flows.







Schedule 6
Free Cash Flow Reconciliation1 (Non-GAAP Measure)





Three months ended March 31,

(in thousands of Canadian dollars, unaudited)


2022


2021

Net cash used in operating activities


$(126,686)


$(97,830)

Purchases of and deposits on property, plant and equipment


(64)


(26,525)

Free cash flow1


$(126,750)


$(124,355)





Years ended March 31,

(in thousands of Canadian dollars, unaudited)


2022


2021

Net cash used in operating activities


$(545,811)


$(465,729)

Purchases of and deposits on property, plant and equipment


(36,684)


(164,502)

Free cash flow1


$(582,495)


$(630,231)

1Free cash flow is a non-GAAP measure. See “Non-GAAP Measures”.

Schedule 7
Segmented Gross Margin Reconciliation





Three months ended March 31,

(in thousands of Canadian dollars, unaudited)


2022


2021

 Global cannabis segment







    Net revenue


$65,975


$101,276

    Cost of goods sold


236,778


106,830

    Gross margin


(170,803)


(5,554)

    Gross margin percentage


(259%)


(5%)










 Other consumer products segment







    Revenue


$45,795


$47,163

    Cost of goods sold


34,234


31,809

    Gross margin


11,561


15,354

    Gross margin percentage


25%


33%





Years ended March 31,

(in thousands of Canadian dollars, unaudited)


2022


2021

 Global cannabis segment







    Net revenue


$337,216


$378,680

    Cost of goods sold


588,451


371,635

    Gross margin


(251,235)


7,045

    Gross margin percentage


(75%)


2%










 Other consumer products segment







    Revenue


$183,109


$167,969

    Cost of goods sold


124,928


108,054

    Gross margin


58,181


59,915

    Gross margin percentage


32%


36%

Schedule 8
Segmented Adjusted Gross Margin1 Reconciliation (Non-GAAP Measure)





Three months ended March 31,

(in thousands of Canadian dollars except where indicated; unaudited)
2022


2021

Global cannabis segment







Net revenue


$65,975


$101,276










Gross margin, as reported


(170,803)


(5,554)

Adjustments to gross margin:







   Restructuring costs recorded in cost of good sold


119,115


10,348

   Charges related to the flow-through of inventory       step-up on business combinations


4,163


Adjusted gross margin1


$(47,525)


$4,794










Adjusted gross margin percentage1


(72%)


5%










Other consumer products segment







Revenue


$45,795


$47,163










Gross margin, as reported


11,561


15,354










Adjusted gross margin1


$11,561


$15,354










Adjusted gross margin percentage1


25%


33%

1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See “Non-GAAP Measures”.





Years ended March 31,

(in thousands of Canadian dollars except where indicated; unaudited)
2022


2021

Global cannabis segment







Net revenue


$337,216


$378,680










Gross margin, as reported


(251,235)


7,045

Adjustments to gross margin:







   Restructuring costs recorded in cost of good sold


123,669


25,985

   Charges related to the flow-through of inventory       step-up on business combinations


11,847


Adjusted gross margin1


$(115,719)


$33,030










Adjusted gross margin percentage1


(34%)


9%










Other consumer products segment







Revenue


$183,109


$167,969










Gross margin, as reported


58,181


59,915

Adjustments to gross margin:







   Charges related to the flow-through of inventory       step-up on business combinations





1,494

Adjusted gross margin1


$58,181


$61,409










Adjusted gross margin percentage1


32%


37%

1 Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures. See “Non-GAAP Measures”.

SOURCE Canopy Growth Corporation

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Canopy Growth Unveils Behind the Scenes Look at 7ACRES’ Premium Flower Production

Canopy Growth Unveils Behind the Scenes Look at 7ACRES’ Premium Flower Production

“We’re a brand grown by enthusiasts, for enthusiasts, and we’re excited to share our recipe for premium flower production with the industry, from whole plant hang drying and hand polishing flower to thoughtfully selecting each genetic through intensive phenotypes to ensure consumers are receiving the best expression of each cultivar,” said Melanie Carruthers, Master Grower, 7ACRES.

“As part of our ongoing commitment to consumer education, the 7ACRES Know the Grow series brings the cannabis community into our state-of-the-art hybrid greenhouse facility to gain an in-depth understanding of the great lengths our growers go to nurture and care for the plants, creating a perfect ecosystem for each unique strain,” said Kelly Olsen, Vice President, Global Flower Business, Canopy Growth. “As Canada’s premium flower market leader, we are committed to showcasing the rigor and care that goes into producing 7ACRES high-quality flower and the attributes that set its premium flower apart, such as trichome density, robust flavor, pungent aromas and terpenes.”
The Canadian premium flower market continues to grow, accounting for more than 24 percent of all recreational market flower sales across Canada in FY221, the 7ACRES team is committed to breaking new ground in cannabis advancement and continuing to deliver on consumer demand for high-quality flower, with several sought-after strains launching in the Canadian recreational market in the coming months. To watch the Know the Grow series and learn more about 7ACRES’ respect for the plant, visit www.7ACRES.com/the-stash, or follow along on Instagram.About Canopy Growth Corporation 
Canopy Growth (TSX:WEED, NASDAQ:CGC) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high-quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States, and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit www.canopygrowth.com.Notice Regarding Forward-Looking Information This press release contains “forward-looking statements” and “forward-looking information” within the meaning of applicable U.S. and Canadian securities laws (collectively, “forward-looking statements”), which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive risks, financial results, results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. A discussion of some of the material factors applicable to Canopy Growth Corporation (“Canopy”) can be found under the section entitled “Risk Factors” in Canopy’s Annual Report on Form 10-K for the year ended March 31, 2021, filed with the Securities and Exchange Commission and with applicable Canadian securities regulators, as such factors may be further updated from time to time in its periodic filings with the Securities and Exchange Commission and with applicable Canadian securities regulators, which can be accessed at www.sec.gov/edgar and www.sedar.com, respectively. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the filings. Any forward-looking statement included in this press release is made as of the date of this press release and, except as required by law, Canopy disclaims any obligation to update or revise any forward- looking statement. Readers are cautioned not to put undue reliance on any forward-looking statement. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.References:
1. CGC Internal Data, January – October 2021, calculated using internal proprietary market share tool that utilizes point of sales data supplied by a third-party data provider, government agencies and our own retail store operations across the country.SOURCE Canopy Growth CorporationFor further information: Media Contact: Kristen McGuey, [email protected]; Investor Contact: Tyler Burns, Director, Investor Relations, [email protected]
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