CANOPY Growth is primed to cull a host of existing brands as it looks to build a multi-market, seed-to-patient model and distance itself from a ‘false starts’ legacy, says CEO Luc Mongeau.
Within striking distance of his second anniversary as Canopy chief Mongeau says its focus now is on delivery; on ‘transforming Canopy Growth® from a financial instrument into a real cannabis company’.
Results for its first quarter 2027, to the end of June, show overall revenues increased 13%, its gross margin rose by 6% to 31% whilst its adjusted EBITDA loss narrowed by 59% to C$3.2m.
With Canopy Growth®’s stock hovering at the perilous $1 dollar range it has established a platform to deliver a potential, reverse-share split to protect its NASDAQ market listing, which Mongeau described as a purely defence play if the stock ‘underperforms’.
He added, bullishly: “We’re building confidence in our ability to grow this business. Our first quarter of fiscal ’27 is extremely encouraging. We see the fundamentals of the business moving in the right direction. We saw great growth in Q1 across all sectors of the business.
“We have cut, and we’re still in the process of cutting upwards of C$40 million of unnecessary cost. We refinanced the entire organization to make sure that it had the right balance sheet to operate for years to come.
“The balance-sheet debt is now in the C$230 to C$280m range – depending on whether you look at carrying value or principal – with maturities, the bulk, extended to 2031.
“This is dramatically lower than the peak debt-levels from the high-valuation era…We’ve built the right cash foundation to invest in the future.
Luc Mongeau, CEO.
No Longer A ‘Financial Instrument’
“So that was mission number one. Mission number two is really to transform Canopy Growth® from a financial instrument into a real cannabis company.”
When pressed on what he meant by this he elaborated: “The board and management were much more preoccupied with financing, with cash in, cash out, financial markets, and the conversations were focused on that.
“When the focus should have been on what is your yield? What’s your THC? What’s your terpene? What is the market penetration? What are the fundamentals of a strong business in Europe? What are strong fundamentals of a strong business in Canadian rec or Canadian medical?”
Canopy Growth® was established in Ontario by Bruce Linton and others in 2013 as Tweed Marijuana. It was one of Canada’s first licensed medical cannabis producers and the following year became the first cannabis company to go public in North America on the TSX Venture Exchange.
In September 2015, after acquiring Bedrocan Canada, the parent company was renamed Canopy Growth® Corporation, with Tweed remaining as one of its main brands.
What Went Wrong?
Back in 2018, Canopy Growth® was riding the cannabis gold rush with a market valuation of C$5bn and a stock price of C$500.
Mongeau, with a background in fast-moving consumer goods, had served on the board for 18 months prior to being made CEO.
He said: “So I’ve been close to Canopy Growth® for about three years. Canopy Growth® was the pioneer and the original player that got billions of dollars in capital.
“And, as the gold rush, or the cannabis rush started, you can imagine that the organization chased a lot of opportunities, chased big numbers, and chased possibilities.
“And, Canopy Growth®, even when I joined as a board member, they were still chasing possibilities. So they were investing heavily in the US market.
“And, as a board member, I had a certain level of frustration because there was a lack of focus on fundamentals.
“The fundamentals are what makes a great cannabis company. So ever since I’ve joined, it’s been very simple. I’m an operator. I come from the great Procter & Gamble, Mars, the George Weston limited organizations.
“We chase real things. So let’s resize the company. So we’ve spent a lot of time, very swiftly doing that.”
Brands & Europe
Mongeau kick-started ‘mission two’ with the purchase of Canadian cannabis producer MTL Cannabis for C$125m, earlier this year
This purchase included its Apollo Cannabis and Canada House Clinics, which provide patient consultations, as well as Abba Medix, a patient pharmacy. These dovetail with Spectrum Therapeutics, the medical arm of Canopy Growth®.
Spectrum Therapeutics delivers the products, the brand and the education. Apollo and Canada House are the clinics that get patients authorised, and Abba Medix is the pharmacy that gets the products to the patients.
This domestic seed-to-patient model is something Canopy Growth® wants to emulate in all of the markets in which it is active.
Canopy Growth® currently has a presence in the German and Polish medical markets, and is in the process of delivering its first medical products to the UK market.
Its total European revenues are C$40m and Mongeau’s ambition to quadruple this over the next few years.
It recently secured EU-GMP certification for 300,000sq ft Kincardine, Ontario, facility which should help it achieve its initial goal.
“This will take time. But we’re laying the right infrastructures to get there. So, as I said earlier, every great cannabis company starts with really good flower.
“In the UK we’re working on forming a partnership at the distributor level and the clinic level, and these are under discussions right now.
“We control the entire journey. So in Canada, we own our own clinic, and we own our pharmacy as well. So from seed to patient, we control the entire experience, and we’re able to see the quality of the care, the quality of the products that we do with patients.
“We’re the number one Canadian medical player by far, and we’re distancing number two quite rapidly. We love this model, and this is the model that we’re trying to replicate globally.”
As well as quality flower, consistent supply is a priority, he added: “We’ve been in Poland for a relatively long period of time. Every time we have flower, we do extremely well.
“The story of Canopy Growth® has been a series of false starts, where you get good flower, sales take off, then there is a shortage of flower, and it starts again at zero.
“In Q1 we supplied the right amount and quality of flower, and we shot right away up to number three in Poland, and we’re confident with the right continued supply, we will achieve a number two status in Poland, based on the reputation of our brands, the reputation of our flower, and the quality of the relationship we have with healthcare practitioners and patients.”
Recreational market
On the recreational side its premium brand is Tweed, it also has partnerships with Californian companies for the Claybourne and Jetty brands, and, of course, has been the owner of Storz & Bikel the leading herbal medical vaporizer company.
Others of its 13 brands currently include; HiWay, a budget-friendly flower, and R’belle, but their future is in doubt.
He added: “We’re sorting through things right now. By the end of the fiscal year, we’ll have a very focused portfolio of brands.”
Summarising his time as CEO, to date, he concluded: “We have moved from a company that was more of a focus on possibilities, what could be, and a company that was seen more as a financial instrument to, now, a real operating company in a real concrete, existing market.
“So it’s been a very busy and rewarding first 18 months for me, and we’re building momentum, so we’re excited.”
The post Canopy Growth Focuses On Fundamentals Ditching ‘Financial Instrument’ Era appeared first on Business of Cannabis.
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Within striking distance of his second anniversary as Canopy chief Mongeau says its focus now is on delivery; on ‘transforming Canopy Growth® from a financial instrument into a real cannabis company’.
Results for its first quarter 2027, to the end of June, show overall revenues increased 13%, its gross margin rose by 6% to 31% whilst its adjusted EBITDA loss narrowed by 59% to C$3.2m.
With Canopy Growth®’s stock hovering at the perilous $1 dollar range it has established a platform to deliver a potential, reverse-share split to protect its NASDAQ market listing, which Mongeau described as a purely defence play if the stock ‘underperforms’.
He added, bullishly: “We’re building confidence in our ability to grow this business. Our first quarter of fiscal ’27 is extremely encouraging. We see the fundamentals of the business moving in the right direction. We saw great growth in Q1 across all sectors of the business.
“We have cut, and we’re still in the process of cutting upwards of C$40 million of unnecessary cost. We refinanced the entire organization to make sure that it had the right balance sheet to operate for years to come.
“The balance-sheet debt is now in the C$230 to C$280m range – depending on whether you look at carrying value or principal – with maturities, the bulk, extended to 2031.
“This is dramatically lower than the peak debt-levels from the high-valuation era…We’ve built the right cash foundation to invest in the future.
Luc Mongeau, CEO.
No Longer A ‘Financial Instrument’
“So that was mission number one. Mission number two is really to transform Canopy Growth® from a financial instrument into a real cannabis company.”
When pressed on what he meant by this he elaborated: “The board and management were much more preoccupied with financing, with cash in, cash out, financial markets, and the conversations were focused on that.
“When the focus should have been on what is your yield? What’s your THC? What’s your terpene? What is the market penetration? What are the fundamentals of a strong business in Europe? What are strong fundamentals of a strong business in Canadian rec or Canadian medical?”
Canopy Growth® was established in Ontario by Bruce Linton and others in 2013 as Tweed Marijuana. It was one of Canada’s first licensed medical cannabis producers and the following year became the first cannabis company to go public in North America on the TSX Venture Exchange.
In September 2015, after acquiring Bedrocan Canada, the parent company was renamed Canopy Growth® Corporation, with Tweed remaining as one of its main brands.
What Went Wrong?
Back in 2018, Canopy Growth® was riding the cannabis gold rush with a market valuation of C$5bn and a stock price of C$500.
Mongeau, with a background in fast-moving consumer goods, had served on the board for 18 months prior to being made CEO.
He said: “So I’ve been close to Canopy Growth® for about three years. Canopy Growth® was the pioneer and the original player that got billions of dollars in capital.
“And, as the gold rush, or the cannabis rush started, you can imagine that the organization chased a lot of opportunities, chased big numbers, and chased possibilities.
“And, Canopy Growth®, even when I joined as a board member, they were still chasing possibilities. So they were investing heavily in the US market.
“And, as a board member, I had a certain level of frustration because there was a lack of focus on fundamentals.
“The fundamentals are what makes a great cannabis company. So ever since I’ve joined, it’s been very simple. I’m an operator. I come from the great Procter & Gamble, Mars, the George Weston limited organizations.
“We chase real things. So let’s resize the company. So we’ve spent a lot of time, very swiftly doing that.”
Brands & Europe
Mongeau kick-started ‘mission two’ with the purchase of Canadian cannabis producer MTL Cannabis for C$125m, earlier this year
This purchase included its Apollo Cannabis and Canada House Clinics, which provide patient consultations, as well as Abba Medix, a patient pharmacy. These dovetail with Spectrum Therapeutics, the medical arm of Canopy Growth®.
Spectrum Therapeutics delivers the products, the brand and the education. Apollo and Canada House are the clinics that get patients authorised, and Abba Medix is the pharmacy that gets the products to the patients.
This domestic seed-to-patient model is something Canopy Growth® wants to emulate in all of the markets in which it is active.
Canopy Growth® currently has a presence in the German and Polish medical markets, and is in the process of delivering its first medical products to the UK market.
Its total European revenues are C$40m and Mongeau’s ambition to quadruple this over the next few years.
It recently secured EU-GMP certification for 300,000sq ft Kincardine, Ontario, facility which should help it achieve its initial goal.
“This will take time. But we’re laying the right infrastructures to get there. So, as I said earlier, every great cannabis company starts with really good flower.
“In the UK we’re working on forming a partnership at the distributor level and the clinic level, and these are under discussions right now.
“We control the entire journey. So in Canada, we own our own clinic, and we own our pharmacy as well. So from seed to patient, we control the entire experience, and we’re able to see the quality of the care, the quality of the products that we do with patients.
“We’re the number one Canadian medical player by far, and we’re distancing number two quite rapidly. We love this model, and this is the model that we’re trying to replicate globally.”
As well as quality flower, consistent supply is a priority, he added: “We’ve been in Poland for a relatively long period of time. Every time we have flower, we do extremely well.
“The story of Canopy Growth® has been a series of false starts, where you get good flower, sales take off, then there is a shortage of flower, and it starts again at zero.
“In Q1 we supplied the right amount and quality of flower, and we shot right away up to number three in Poland, and we’re confident with the right continued supply, we will achieve a number two status in Poland, based on the reputation of our brands, the reputation of our flower, and the quality of the relationship we have with healthcare practitioners and patients.”
Recreational market
On the recreational side its premium brand is Tweed, it also has partnerships with Californian companies for the Claybourne and Jetty brands, and, of course, has been the owner of Storz & Bikel the leading herbal medical vaporizer company.
Others of its 13 brands currently include; HiWay, a budget-friendly flower, and R’belle, but their future is in doubt.
He added: “We’re sorting through things right now. By the end of the fiscal year, we’ll have a very focused portfolio of brands.”
Summarising his time as CEO, to date, he concluded: “We have moved from a company that was more of a focus on possibilities, what could be, and a company that was seen more as a financial instrument to, now, a real operating company in a real concrete, existing market.
“So it’s been a very busy and rewarding first 18 months for me, and we’re building momentum, so we’re excited.”
The post Canopy Growth Focuses On Fundamentals Ditching ‘Financial Instrument’ Era appeared first on Business of Cannabis.
Continue reading...
