Canopy Growth: A Look at the Company’s History and Future

Based in Ontario, Canopy Growth Corporation was the first North American business to be regulated by the federal government and publicly traded. The company manufactures a considerable volume of the country’s legal marijuana flowers, oils, and edibles. These are sold under different brand names across Canada. Today Canopy is worth over $20 billion, and remains the largest hemp and cannabis enterprise globally, with more than 25 subsidiary companies and activities on five continents.  Some 2,700 full-time personnel are employed by the company.

Canopy Growth origins

Canopy Growth Corporation began as MABH Ontario Inc., which was founded by senior tech executives Bruce Linton and Chuck Rifici in 2010.

In December 2012, the Conservative government of Stephen Harper announced plans to privatise Canada’s medical marijuana industry. MABH Ontario was renamed Tweed Marijuana Inc. the following year and was among the first to sell regulated marijuana in Canada by the end of 2013. On January 27, 2014, the company was awarded a license to sell medical marijuana to patients.

Tweed was eventually listed on Alberta’s TSX Venture Exchange in April 2014 and sold cannabis for the first time the following month. It was around this time that Rifici was terminated from the company. He proceeded to file a lawsuit against Canopy for unfair dismissal. In response, the company countersued, with both cases still pending in court.

By the end of 2014, Tweed’s product range had grown significantly (13 products). At the close of 2015, the company boasted approximately 8k customers. Tweed Marijuana Inc. changed its name to Canopy Growth Corporation, with the name Tweed remaining a Canopy brand. Canopy’s medical cannabis business grew rapidly in the ensuing years, serving more than 70k customers as of March 31, 2018.

Canopy Growth Expansion

Canopy Growth Corp.’s expansion is based on partnerships. As a result of several acquisitions, the company has expanded into diverse regions and sectors of the cannabis and hemp markets. The corporation is not a single entity but rather a conglomerate of smaller cannabis enterprises operating under the Canopy umbrella.

In August 2015, the company acquired medical cannabis companies running under the Bedrocan Canada brand. Although a licensing agreement with Bedrocan International BV fell through, Bedrocan Canada remains a Canopy subsidiary.

In September of that year, Tweed Marijuana Inc. became Canopy Growth Corporation, shortly after which it entered into an exclusive Canadian partnership with DNA Genetics, a Netherlands-based cannabis company.

By the end of January 2016, it had acquired a leading competitor, Mettrum, for $430 million, serving 50% of the licensed Canadian cannabis users.

Public opinion of cannabis use for both medical and recreational purposes was shifting, and dialogue about its legalisation was becoming more serious after the election of Prime Minister Justin Trudeau in 2015.

Snoop Dogg and acquisitions

Canopy introduced a cannabis product line in partnership with world-renowned rap star Snoop Dogg in October 2016. In November, it acquired Vert Médical, a Quebec-based company that was in the process of obtaining a federal license to produce cannabis. Around the same time, Canopy also purchased MedCann GmbH. This German medical distributor changed its name to Spektrum Cannabis and was licensed to import medical cannabis from Canopy in Canada.

Smith Falls, Ontario

Canopy Growth Corp. bought the 472,000-square-foot production facility it was renting in Smiths Falls, Ontario, in January 2017 for $6.6 million. This amount was comprised of both cash and shares. This acquisition increased Canopy’s production and processing capabilities by almost three times. Canopy continued to acquire various other significant production sites throughout Canada.

Cannabis Act

In April 2017, the Canadian federal government introduced Bill C-45 (the Cannabis Act). By the summer of that year, the Smiths Falls plant had 200 employees. Canopy Growth continued its partnership with DNA Genetics that October. By the end of 2017, Canopy had secured agreements to supply 12,000 kg of cannabis to Newfoundland and Labrador as well as New Brunswick over a two-year period upon the legalisation of the recreational market. As legalisation progressed, Canopy received supply contracts from other parts of Canada.

Canopy Growth Corp.’s experience as a regulated medical producer prepared it to be a major cannabis supplier for Canada’s legal market. The Cannabis Act was enacted in June 2018 and came into force in October of that year, legalizing the possession and cultivation of cannabis for adults in Canada. Canopy’s products are sold throughout Canada, including those with both public and private sales. The company runs private cannabis shops (Tweed branded) in Manitoba, and Newfoundland and Labrador.

However, the company and other licensed producers underestimated the demand for cannabis in the early days of legalization, resulting in supply shortages. Canopy sold over one million units of cannabis to recreational customers within a couple of months of legalization, a stark contrast to the amount sold to medical cannabis clientele over four years. By early 2019, Canopy Growth Corp. was valued at over $20 billion and employed 2,7k full-time personnel across its 10 licensed production sites.

2018 and 2019

Canopy entered a $5-billion partnership with US-owned alcohol company Constellation Brands in August 2018. Today, Constellation Brands owns 38% of Canopy, up from its 9.9% share in 2017. The company plans to use the funds to enter the markets of 30 countries where medical cannabis is being explored as a legal option. At the start of 2019, Canopy revealed that it would invest approximately US$150 million in a hemp production and processing facility in New York State, following the US legalization of hemp and hemp-derived products. In addition, American businesswoman, writer and TV personality Martha Stewart joined Canopy as an adviser. In this role, Stewart will work with Canopy to develop hemp-derived cannabidiol (CBD) products.

By 2018, Canopy had 27 subsidiaries (controlled or jointly controlled) and 19 affiliates. The company operates in twelve countries in 5 continents.

CGC: Canopy Growth stock

The company seems to be focusing on cutting costs while continuing to prioritise cannabis production. BioSteel and Acreage Holdings branches are expected to generate strong revenue. By the end of 2023, Canopy Growth stock may shift its focus entirely to its U.S. operations, with Canada providing support for the company’s growth. The bottom line is that the company is in a transition phase, with profit and U.S. operations being the main priorities. Canopy Growth stock could get a boost, as the US is forecast to become the largest cannabis consumer in the world. If you are interested in trading stocks through CFDs, IronFX offers a wide range of CFDs on shares of the most popular companies with competitive trading conditions. If you don’t already have an account, open a trading account, and explore the best that the solid broker has to offer.

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This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.