Canopy sales slide on shift to Amazon-like platform
An e-commerce shift by Canada’s biggest pot producer took a bite out of its first-quarter earnings, but leaves it in a position to profit when the country’s cannabis prohibition ends next year, the company suggests.
Canopy Growth Corp. reported Monday that a move from three e-commerce sites to one “Amazon-like” platform curbed sales over a 10-business-day stretch in April, which cut into its revenue for its first quarter of fiscal 2018. Canopy has several cannabis brands under its banner, including Tweed, marketed by rapper Snoop Dogg.
“The process of launching Tweed Main Street did negatively affect the month of April,” said Bruce Linton, chairman and chief executive of Canopy, during a conference call on Monday. “When you merge and move, you have to slow down or shut down, and so we were willing to take that hit and it seemed to be certainly worth it, because as we run forward, it’s much easier and much more scalable.”
Canopy’s first-quarter revenue reached $15.9 million, a 127-per-cent increase over the $7 million reported for the same period in 2016. However, the Smiths Falls, Ont.-based company also reported greater administrative and marketing costs for the quarter, and took a net loss of $4.4 million, up from a $3.9-million loss for the same three months of last year.
The results come with the federal government aiming to legalize recreational marijuana by July 2018. While there have been suggestions from some provinces that this could be too much, too soon, the Liberals have said it is prepared to supervise a mail-order pot program if provinces aren’t ready.
Canopy said that it expects some provinces will take their time with brick-and-mortar sales, creating an opportunity for mail-order delivery.