With legalization looming, Ottawa-area pot firm Canopy Growth increases production

Bruce Linton
Canopy Growth CEO Bruce Linton (OBJ file photo).

The largest marijuana producer in the Ottawa area said Tuesday that it significantly raised its revenues, product volumes, expenses and patient base in its fiscal 2017 year as the high-growth company readies itself to tap into the country's soon-to-be legal cannabis market.

Canopy Growth Corp. (TSX:WEED) saw its fourth-quarter net loss quadruple to $21.1 million as expenses rose sharply. Its expense items included $5.4 million of acquisition-related costs, which weren't a factor last year, due to its purchase of Mettrum Health Corp.

Canopy’s net loss for the fiscal year ending March 31, 2017 was $16.7 million, a substantial increase from $3.5 million a year earlier.

Meanwhile, share-based compensation expenses before acquisitions rose to $4.7 million from $1 million.

Canopy Growth’s revenue for the past fiscal year was $39.9 million, an increase of 214 per cent year-over-year. Revenue during the three months ended March 31 rose to $14.7 million, including two months of contributions from Mettrum, up from $5 million a year earlier.

Expectations that the federal government will regulate marijuana sales have attracted significant attention to Canopy Growth in the past year, with shares of the firm rising on news of the feds’ intended July 1, 2018 legalization date. A series of recommendations submitted late last year by a government pot task force, such as plain packaging and mail-order delivery, align well with Canopy Growth’s existing operations.

"Continued investment and the execution of unique, market-driven business strategies have firmly positioned Canopy to address the legal adult recreational market that is set to open in Canada in 2018 and expand into federally-legal markets around the world," said CEO Bruce Linton in a statement. He added that the firm's patient base had also doubled in the past year to more than 58,000.

Shares of Canopy Growth closed at $8.46 yesterday, but dropped below eight dollars on news of its annual earnings when markets opened this morning. Shares inched back up to $8.15 by midday trading.

With files from OBJ’s Craig Lord