Business Overview Canopy Growth Corporation (CGC) is a world-leading cannabis company that has been at the forefront of the industry since its inception. Founded in 2013, the company has grown to become a dominant player in the Canadian cannabis market, while also establishing a significant presence in international medical cannabis markets. As the cannabis landscape continues to evolve, Canopy Growth has demonstrated its ability to adapt and thrive, navigating the complexities of this dynamic industry.
Canopy Growth was established in 2013 in Smiths Falls, Ontario, Canada, with the goal of becoming a premier provider of cannabis products for both the medical and adult-use markets. The company's core operations are in Canada, Europe, and Australia, where it offers branded high-quality flower, oil, and extract products under the Spectrum Therapeutics, Canopy Medical, and Tweed brands.
In 2018, Canopy Growth experienced significant growth when the Cannabis Act came into effect in Canada, legalizing the production, distribution, and sale of cannabis for adult-use and medical purposes. The company rapidly expanded its cultivation and manufacturing capabilities to meet the growing demand in the Canadian market. However, this period was not without challenges, as Canopy Growth faced supply chain issues and regulatory hurdles, which led to inconsistent product availability and quality.
A major milestone for Canopy Growth came in 2019 when it received a $5.1 billion investment from Constellation Brands, a major alcohol beverage company. This strategic partnership provided Canopy Growth with the resources to strengthen its balance sheet and invest in international expansion. One notable acquisition resulting from this investment was the German-based Storz & Bickel, a leading manufacturer of premium vaporizers.
Despite its growth and expansion efforts, Canopy Growth has faced several setbacks in recent years. In 2023, the company experienced financial reporting issues related to its BioSteel sports nutrition business, leading to an internal review and an ongoing investigation by the U.S. Securities and Exchange Commission. Additionally, the company has undergone restructuring and cost-savings initiatives to improve its profitability and operational efficiency, including the divestiture of its This Works skincare business in 2023.
In May 2023, Canopy Growth voluntarily self-reported to the SEC that the timing and amount of revenue recognition in the BioSteel Canada segment were under review. As a result, the company is the subject of an ongoing SEC investigation. The company denies any alleged misconduct. In June 2023, a putative class action lawsuit was filed against the company and certain officers alleging misstatements and omissions regarding BioSteel Canada's revenue, performance and internal controls. Furthermore, in January 2024, a shareholder derivative lawsuit was filed against the company's directors and certain officers alleging misstatements and omissions regarding BioSteel Canada's revenue and internal controls.
Financial Performance Canopy Growth's financial performance has been marked by both successes and challenges. In the fiscal year 2024, the company reported net revenue of $297.15 million, a decrease of 12.4% compared to the previous year. This decline was primarily due to increased competition and pricing pressure in the Canadian adult-use cannabis market, as well as the divestiture of the company's This Works business unit. The company also reported a net income of -$657.27 million, operating cash flow of -$228.42 million, and free cash flow of -$285.95 million for the fiscal year 2024.
In the most recent quarter (Q2 2025), Canopy Growth reported revenue of $62.99 million, a decrease of 9% year-over-year. This decline was driven by a 24% decrease in Canadian adult-use cannabis revenue, partially offset by 16% growth in Canadian medical cannabis revenue and 12% growth in international markets cannabis revenue. The company's net income for Q2 2025 was -$128.29 million, with operating cash flow of -$53.85 million and free cash flow of -$56.44 million. The decrease in net income was primarily due to non-cash fair value changes on the company's financial assets and investments.
Despite these revenue challenges, Canopy Growth has made progress in improving its profitability. In the fiscal year 2024, the company reported an adjusted EBITDA loss of $88.15 million, a significant improvement compared to the previous year's loss of $289.33 million. This improvement was driven by the company's ongoing cost-saving initiatives, as well as its focus on higher-margin segments, such as its medical cannabis and Storz & Bickel businesses.
Liquidity and Solvency Canopy Growth's balance sheet has been a point of focus for investors and analysts in recent years. As of September 30, 2024, the company had cash and short-term investments of $231 million, with a total debt balance of $668.00 million. The company's current ratio, a measure of its ability to meet short-term obligations, stood at 1.39, with a quick ratio of 1.07, indicating a relatively strong liquidity position.
The company's debt-to-equity ratio as of September 30, 2024, was 1.09. Canopy Growth has a $474.2 million term loan facility, with $14.3 million in deferred financing costs. The facility matures in December 2026 and bears interest at variable rates.
However, Canopy Growth has faced challenges in managing its debt load, leading to the company's decision to undertake various balance sheet actions, including the repurchase of outstanding debt at a discounted price. These efforts have helped to reduce the company's total debt and improve its overall financial flexibility.
Operational Highlights One of the key operational highlights for Canopy Growth in recent years has been the performance of its Storz & Bickel business unit. Storz & Bickel, a leading manufacturer of premium medical vaporizers, has consistently delivered strong revenue growth and high-margin performance for the company. In Q2 2025, Storz & Bickel's net revenue was $15.9 million, up from $12 million in the prior year period. This increase was primarily driven by strong growth in Germany and the U.S., sales of the Mighty vaporizer, and contributions from the new Venty portable vaporizer.
Additionally, Canopy Growth's medical cannabis operations, both in Canada and internationally, have been a bright spot for the company. In Q2 2025, the company's Canadian medical cannabis revenue grew by 16% year-over-year, as the company continued to expand its product offerings and capture a larger share of the high-margin medical cannabis market. The international markets cannabis segment also saw growth, with net revenue of $10.1 million, up from $9 million in the prior year period. This increase was primarily attributable to higher shipments of flower products in Europe, particularly in Poland and Germany, partially offset by a decline in the Australian medical business.
Canopy USA Strategy In October 2022, Canopy Growth completed a strategic reorganization, creating a U.S.-domiciled holding company called Canopy USA. This move was designed to position the company for success in the U.S. cannabis market, which remains a key growth opportunity despite the continued federal prohibition of cannabis.
Through Canopy USA, Canopy Growth has acquired interests in several prominent U.S. cannabis brands, including Wana Brands, Jetty Extracts, and Acreage Holdings. By integrating these assets, Canopy USA aims to leverage synergies and capitalize on the growing U.S. cannabis market, particularly as more states move towards legalization.
Risks and Challenges Despite Canopy Growth's progress, the company continues to face a variety of risks and challenges inherent to the cannabis industry. One of the most significant risks is the ongoing regulatory uncertainty surrounding cannabis, both in Canada and globally. Changes in federal, provincial, or state laws and regulations could have a significant impact on the company's operations and financial performance.
Additionally, Canopy Growth faces intense competition in the Canadian adult-use cannabis market, which has led to pricing pressures and market share erosion. The company's ability to maintain its competitive edge and adapt to changing market conditions will be crucial to its future success.
Another key challenge for Canopy Growth is the need to continue investing in innovation and product development to meet the evolving preferences of cannabis consumers. The company's ability to stay ahead of the curve and introduce new and differentiated products will be critical in driving long-term growth.
Future Outlook Looking ahead, Canopy Growth expects continued strength in their Canada Medical business and improved performance in their Canada Adult-use business in the second half of FY2025. This growth is expected to be driven by restored Wana edibles supply, expanded distribution, and new product launches.
For the International Markets Cannabis segment, the company is focused on ensuring consistent supply and launching new products to meet demand in Poland and Germany, while also working to strengthen their competitive positioning in Australia.
In the Storz & Bickel segment, Canopy Growth anticipates growth to continue in the second half of FY2025, with Q3 benefiting from higher Venti contribution. However, Q4 growth is likely to be more muted due to the strong launch quarter in the previous year.
With expected top-line growth in the second half of FY2025 and continued cost discipline, Canopy Growth believes they remain on a path to achieve positive adjusted EBITDA at the consolidated level in the coming quarters.
Conclusion Canopy Growth's journey in the cannabis industry has been marked by both successes and challenges. The company has demonstrated its ability to adapt and innovate, leveraging its strong brand portfolio, international footprint, and strategic partnerships to navigate the complexities of this dynamic market.
As Canopy Growth continues to execute on its Canopy USA strategy and capitalize on opportunities in the medical and adult-use cannabis markets, the company's ability to maintain its competitive edge, manage its financial position, and adapt to regulatory changes will be crucial factors in determining its long-term success. Investors will closely monitor Canopy Growth's progress in the coming years as the company strives to solidify its position as a leader in the global cannabis industry.