Weak Cannabis Sales Drive Canopy Growth Q3 Revenue 8% Lower to C$141 Million

Canopy Growth Reports Third Quarter Fiscal 2022 Financial Results

Encouraging Q3 FY2022 performance drove sequential revenue growth and record quarterly revenue for BioSteel and Storz & Bickel businesses

SMITHS FALLS, ON, Feb. 9, 2022 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the third quarter fiscal 2022 ended December 31, 2021. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

In the third quarter we actioned to win where it matters – driving record performance in our CPG business from both BioSteel and Storz & Bickel, while beginning to stabilize our Canadian business including maintaining the #1 position in premium flower. Our continued discipline and focus are expected to fortify Canopy’s competitive positioning in Canada as we ambitiously build our U.S. CPG, CBD, and THC strategies.

David Klein, Chief Executive Officer

“Throughout fiscal 2022, we continued to reduce our operating expenses and capital investments. With a renewed sense of urgency, we are focused on achieving profitability in Canada by taking additional steps to simplify our business and optimize our expenses, while making strategic investments in key growth areas.”

Judy Hong, Interim Chief Financial Officer


  • Net revenue increased 7% versus Q2 FY2022. Net revenue decreased by 8% during Q3 FY2022 versus Q3 FY2021, as strong growth in consumer products revenue was offset by the decline in Canadian cannabis sales.
  • BioSteel and Storz & Bickel (“S&B”) achieved record quarterly revenue during Q3 FY2022 driven by expanded distribution of BioSteel and new products launches for S&B.
  • U.S. CBD distribution drive increased Martha Stewart CBD and Quatreau door count in Q3 FY2022 by 21% and 225%, respectively from Q2 FY2022.
  • Actions well underway to drive improved execution in the Canadian cannabis market, with DOJA, 7Acres and Tweed innovation supporting flower strategy and hero brand, Deep Space, line extension.
  • U.S. MSO ecosystem strengthens with acquisition of an option to purchase Wana Brands upon federal permissibility of THC in the U.S., along with continued growth of Acreage’s footprint with its recent acquisition of operations in Ohio, establishing a market-leadership position in the state.
  • Established cross-functional team to execute North America THC strategy, leveraging early advantages of strong balance sheet, scalable THC brands, established national distribution channels and MSO relationships to expedite entry into the U.S. upon federal permissibility of THC.
  • Released inaugural Environmental, Social and Governance report, demonstrating the Company’s commitment towards responsible and sustainable growth.

Third Quarter Fiscal 2022 Financial Summary

1 Adjusted gross margin is a non-GAAP measure, and for Q3 FY2022 excludes $3.1 million related to the flow-through of inventory step-up associated with the acquisition of Supreme Cannabis and $4.6 million restructuring costs recorded in cost of goods sold (Q3 FY2021 – excludes $nil related to the flow-through of inventory step-up and $15.6 million restructuring costs recorded in cost of goods sold). See “Non-GAAP Measures”.

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

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

Third Quarter Fiscal 2022 Financial Summary


Net revenue of $141 million in Q3 FY2022 was a decline of 8% versus Q3 FY2021. Total global cannabis net revenue of $83 million in Q3 FY2022, represented a decline of 20% over Q3 FY2021. Other consumer products revenue of $58 million in Q3 FY2022, represented an increase of 19% over Q3 FY2021. Excluding the impact from acquired businesses, net revenue declined 17% and global cannabis net revenue declined 34% versus Q3 FY2021.

Gross margin:

Reported gross margin in Q3 FY2022 was 7% as compared to 16% in Q3 FY2021. Excluding non-cash restructuring costs recorded in cost of goods sold and inventory step-up charges from acquisitions, adjusted gross margin was approximately 13%. Gross margin in Q3 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. Gross margin in Q3 FY2022 benefited from payroll subsidies in the amount of $7 million received from the Canadian government, pursuant to a COVID-19 relief program.

Operating expenses:

Total SG&A (“SG&A”) expenses in Q3 FY2022 declined by 19% versus Q3 FY2021, driven by year-over-year reductions in General & Administrative (“G&A”) and Research and Development (“R&D”) expenses partially offset by an increase in Sales & Marketing (“S&M”) expenses. G&A expenses declined 47% year-over-year primarily due to reductions in staffing and professional fees and benefited from payroll subsidies received from the Canadian government in Q3 FY2022, pursuant to a COVID-19 relief program. R&D expenses declined 53% year-over-year principally due to a more disciplined approach to R&D investments. S&M expenses increased 20% year-over-year primarily due a return to more normal advertising and promotions spending in Q3 FY2022, compared to the prior year period, higher sponsorship fees associated with BioSteel’s partnership deals and increased advertising expenses associated with new product launches.

Net Earnings:

Net Earnings in Q3 FY2022 amounted to a loss of $115 million, which is a $714 million improvement versus Q3 FY2021, driven primarily by lapping material non-cash asset impairment and restructuring charges in Q3 FY2021 and Other Income totaling $34 million during Q3 FY2022 mostly attributable to non-cash fair value changes of $59 million.

Adjusted EBITDA:

Adjusted EBITDA loss in Q3 FY2022 was $67 million, a $1 million improvement versus Q3 FY2021 primarily driven by the reduction in our total SG&A expenses, mostly offset by lower sales and a decline in gross margins.

Free Cash Flow:

Free Cash Flow in Q3 FY2022 was an outflow of $168 million, a 24% increase in outflow versus Q3 FY2021. Relative to Q3 FY2021, the Free Cash Flow outflow increase reflects higher interest paid and the timing of working capital.


Cash and Short-term investments amounted to $1.4 billion at December 31, 2021, 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.

Third Quarter Fiscal 2022 Business Highlights

Quarter of action to drive improved performance beginning to show traction


  • Maintained #1 market share in total Canada premium flower category with 10% share4.
    • New high potency strains arriving in market with a launch of 10 new premium flower strains under DOJA, 7ACRES and 7ACRES Craft Collective brands in Q3 FY2022 including DOJA 91K, 7ACRES Wappa 49 and 7ACRES Craft Collective Jet Fuel Cookies.
  • Strong consumer demand for new strains helped stabilize the Company’s share of the mainstream flower market in Q3 FY2022.
    • New Tweed Powdered Donuts and Tweed Chemdawg flower launched in Q3 FY2022, drawing positive consumer feedback on improved flower quality including moisture content and aroma, as well as improved bag appeal.
    • New strains launched Tweed’s brand evolution featuring many brand improvements including new flower packaging, made from 90 percent less material by weight than Tweed’s original tin packaging, with a refreshed look and feel and new colour profiles by strain type.
    • Tweed brand extension into beverages with strong consumer demand for Tweed Fizz Seltzer 5mg THC beverages, including new Tweed Fizz Cherry launched in Q3 FY2022.
  • Expanded the popular Deep Space brand in Q3 FY2022 across beverage and edible formats.
    • Launch of new Deep Space XPRESS gummies and new Deep Space Limon Splashdown flavour 10mg THC beverage.
    • New Deep Space Orange Orbit beverage flavour began shipping in the past month with three additional Deep Space beverage flavours expected to ship over the coming months.
  • Canopy Growth is taking action to drive further performance improvements in the Canadian adult-use cannabis market.
    • Premiumization strategy for flower products progressing with cultivation & new genetics strategy developed and being executed to address shifting consumer preferences for single strain, high THC products.
    • Streamlined new product development process to improve efficiency, effectiveness and timeliness of new product development and time to market.
    • Focused distribution drives and revamped retailer engagement program being executed to increase distribution and velocity for focus SKUs.

4 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 30% 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.

United States

  • Successful launch of whisl CBD vape with Circle-K has made whisl the #1 CBD-only Vape5 in Food, Drug, Mass + Convenience channels according to IRI Data for the 13 weeks ended December 26, 2021.
  • Significant gains in BioSteel distribution drove record quarterly revenue in Q3 FY2022.
    • Recently announced the signing of BioSteel retail authorizations with Albertsons Company, Rite Aid, Food Lion, Stop & Shop and Sheetz as well as over 20 additional national, regional and local grocery, convenience and drug chains. Additional authorizations are expected to be signed over the coming months.
    • Multiple sponsorship, #TeamBioSteel athlete ambassador, trade marketing, social media, and sampling program activations underway to drive brand awareness, product trial and purchase.
  • Strong consumer demand for new S&B vaporizers, including the limited-edition VOLCANO ONYX and MIGHTY+ vaporizers, helped drive record quarterly revenue in Q3 FY2022.
  • Further action to drive U.S. CBD distribution by onboarding new distributors to expand CBD brand portfolio into additional U.S. states, including into California, and into Food, Drug, Mass + Convenience channels.
    • Martha Stewart CBD and Quatreau door count in Q3 FY2022 increased sequentially from Q2 FY2022 by 21% and 225%, respectively.
    • Martha Stewart CBD continues to drive demand with innovative line extensions including Holiday-themed CBD Peppermint Ribbons and Snowflake CBD Gummy Sampler.

North America THC ecosystem

  • Canopy Growth aspires to build the leading cannabis business in the US and gained momentum with plan to acquire Wana Brands (“Wana”), a leading cannabis edibles brand in North America, upon U.S. federal permissibility of THC.
  • Wana strengthened its U.S. footprint in Q3 FY2022 signing a license agreement covering the state of Nevada, and in Q3 FY2022 saw the continued growth in popularity of Wana Quick “Fast Acting” gummies and the Optimal Fast Asleep and Fit offerings.
  • U.S. MSO Acreage Holdings (“Acreage”) strengthened its balance sheet with the recent signing of a USD$150 million credit facility to support its refocused strategy and build depth in core markets. Acreage closed the acquisition of operations in Ohio, establishing a market leadership position in the state.
  • Canopy Growth has established dedicated internal organization to drive synergy across THC strategy, M&A, and Consumer Insight’s capabilities to execute the Company’s North America THC strategy to establish a scalable footprint, best-in-class products and national distribution networks required to unlock the U.S market.

On December 15, 2021, the Company entered into an agreement to divest all of its interest in C3 Cannabinoid Compound Company GmbH (“C3“) to a European pharmaceutical company headquartered in Germany. C3 develops and manufactures cannabinoid-based pharmaceutical products for distribution in Germany and certain other European countries. The divestiture was completed on January 31, 2022, pursuant to which the Company received a cash payment of $128 million (€89 million), inclusive of cash, working capital and debt adjustments. The Company will also be entitled to an earnout payment of up to €43 million subject to the achievement of certain milestones by C3.

5 Excluding Delta-8 THC vapes.

Driving brand awareness through omni channel activations

Third Quarter Fiscal 2022 Revenue Review

Revenue by Channel

Revenue by Form

Canadian Cannabis

  • Recreational B2B net sales in Q3 FY2022 decreased 23% 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 Q3 FY2022 decreased 28% versus Q3 FY2021 largely driven by increased competition from the rapid increase in third party retail locations across provinces.
  • Medical net revenue in Q3 FY2022 decreased 7% from Q3 FY2021 driven primarily by higher average order sizes offset by a fewer number of orders.

International Cannabis

  • C3 revenue in Q3 FY2022 decreased 45% year-over-year as a result of increased competition and price compression.
  • Other revenue in Q3 FY2022 increased 42% over the prior year period primarily due to growth in U.S. CBD sales and bulk cannabis sales by Supreme Cannabis into the Israel medical cannabis market.

Other Consumer Products

  • BioSteel sales in Q3 FY2022 increased 130% over Q3 FY2021 driven by the launch of ready-to-drink “RTD” beverages and expanded distribution in the U.S. market.
  • S&B vaporizer revenue in Q3 FY2022 increased 5% over Q3 FY2021 due primarily to sales of new VOLCANO ONYX and MIGHTY+ vaporizers launched late in the second quarter of fiscal 2022.
  • This Works sales in Q3 FY2022 decreased 2% over Q3 FY2021 due in part to lapping strong sales in the prior year.

The third quarter fiscal 2022 and third quarter fiscal 2021 financial results presented in this press release have been prepared in accordance with U.S. GAAP.

8 Excludes the impact of other revenue adjustments.

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

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, Interim CFO at 10:00 AM Eastern Time on February 9, 2022.

Webcast Information

A live audio webcast will be available at:


Replay Information

A replay will be accessible by webcast until 11:59 PM ET on May 10, 2022 at:


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.

Original Press Release

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