Canada’s Canopy Growth, which is backed by the drinks major Constellation Brands reported a $1 Billion loss on Wednesday causing its stock to plummet.
As reported by MarketWatch, Canopy Growth, the world’s largest cannabis company by market value, put the loss down to the elimination of C$1.18 billion in warrants (agreed upon stock options) related to Constellation’s investment.
After Canopy Growth’s late Wednesday announcement shares of the publicly traded company which amusingly uses the ticker WEED, were down as much as 10% in afterhours trading…
Canopy Growth is a world-leading cannabis and hemp company offering distinct brands and curated cannabis varieties in dried, oil and capsule forms. The firm has operations in 12 countries across five continents.
In 2018, the Victor, New York-based company and the third largest brewer in the US behind AB InBev and MillerCoors, closed a $4 Billion investment in the Canadian pot producer…
But with big money big things are expected but so far Canopy Growth has been hemorrhaging Constellation Brands’ money.
This time last year, Canopy Growth reported losses of C$91 million, or 40 cents a share, while loses this quarter rose to C$3.70 a share.
And last month the company fired its founder and co-CEO, Bruce Linton, a week after Constellation expressed disappointment over its financial losses according to the Drinks Business. That exit left Mark Zekulin in charge and he’s expected to step down once a new CEO is found.
Linton (who founded what would become Canopy Growth in 2013) strategy of pursuing growth at the expense of short-term profits have fallen out of favor with Constellation.
And Constellation, home to beer brands such as Corona Extra, Corona Light, Modelo Especial, Modelo Negra, Pacifico, Ballast Point, Funky Buddha, as well as a full roster of wine and spirit offerings, had been pressuring the Canadian pot producer for a clearer timeline for a return on its investment in Canopy.
“The company remains focused on laying the foundation for dominance in an emerging global opportunity,” Zekulin said in a statement. “We are fixated on the process of evolving from builders to operators.”
Constellation Brands currently owns nearly 56% in Canopy Growth and holds four of its six board seats. And its backing of Canopy is the largest investment in the cannabis industry to date.
In 2015, Constellation Brands acquired Ballast Point Brewing, a $1 billion bet on the craft beer biz that it may now regret.
Might its extensive investment in Canopy Growth lead to another?