Canopy Rivers, the venture capital arm of Smiths Falls-based cannabis company Canopy Growth, swung to a loss in its latest quarter as its operating expenses soared.
The Toronto-based firm reported Tuesday a loss of $1.8 million in the three months ended March 31 compared with a profit of nearly $14.6 million in the same quarter last year.
Its operating expenses for the quarter however amounted to $7.5 million, up from $2.39 million during the quarter one year ago, as it invested in companies such as Greenhouse Juice Co.
Canopy Rivers said as positive global sentiment towards pot rises and Canada legalizes edibles, topicals and extracts, there is growth potential for the industry and ancillary businesses which do not touch the plant.
"We have strategically positioned ourselves as an accelerator of growth for companies that we believe are situated to be leaders in the cannabis industry," said Narbe Alexandrian, Canopy Rivers' chief executive in a statement.
Its latest earnings come as Canadian regulations governing next-generation cannabis products, such as pot-infused beverages, are set to come into force in October, allowing them to be sold in mid-December at the earliest.
Meanwhile, while cannabis remains illegal at the federal level south of the border, the political climate is warming up with the U.S. House of Representatives holding hearings on pot legalization last week.
To date, Canopy Rivers has made investments in 18 companies in Europe, the U.S. and Canada.
That includes a $9-million convertible debenture investment during the quarter in the Greenhouse Juice Co., which intends to expand its business model to include beverages infused with cannabidiol, or CBD, the non-intoxicating compound derived from cannabis and hemp.
The venture capital firm also during the quarter completed a US$2-million equity investment in a joint venture with LeafLink Inc., a business-to-business marketplace and supply chain technology platform.
Canopy Rivers' loss amounted to two cents per diluted share for what was its fourth quarter compared with a profit of 11 cents per diluted share a year ago. Operating income for the three-month period totalled nearly $6.1 million, down from $19.5 million a year earlier.
For its full financial year, Canopy Rivers says it earned $3.9 million or two cents per diluted share on $38.5 million compared with a profit of $36.4 million or 36 cents per diluted share in the previous year. Operating income totalled $38.5 million, down from $50.2 million.
Earlier this month, Bruce Linton stepped down as chairman and a director of the company at the same time that he was ousted from Canopy Growth.