How Canopy Growth Makes Money: Recreational and Medical Marijuana


Canopy Growth Corp. (NYSE: CGC; TSX: WEED) is a Canada-based holding company that produces, distributes, and sells a variety of cannabis and hemp-based products for medical and recreational use. Its products include dried flower, hemp, vape pens and cartridges, THC- and CBD-infused beverages, and edibles.

Founded in 2013, Canopy Growth faces competition from a large number of U.S. and primarily Canada-based cannabis companies, including Cronos Group Inc. (NASDAQ: CRON; TSX: CRON.TO), Aurora Cannabis Inc. (NYSE: ACB; TSX: ACB.TO), and OrganiGram Holdings Inc. (NASDAQ: OGI; TSX: OGI.TO).

Key Takeaways

  • Canopy Growth produces, distributes, and sells medical and recreational cannabis.
  • Recreational-use cannabis sales are its biggest revenue source.
  • The company is investing heavily in international sales, where medicinal marijuana is one of its fastest growing areas.
  • Canopy growth has laid off more than 500 workers in Canada this year as the recreational cannabis market is developing slower than expected.

Canopy Growth’s Financials

Canopy Growth prepares its financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The financial data presented below is in Canadian dollars in accordance with the company’s financial statements.

Canopy Growth management has focused on a strategy of absorbing financial losses short term in order to dramatically expand its operations and sales in the emerging recreational and medical cannabis markets in the U.S, Canada, and globally.

The company posted a net loss of $128.3 million in Q1 of its 2021 fiscal year (FY), the three-month period that ended June 30, 2020. It was a significant improvement from the net loss of $194.1 million during the year-ago quarter. Net revenue in Q1 FY 2021 grew 22.0% to $110.4 million, primarily driven by growth in medical-use cannabis sales. 

Canopy Growth’s Revenue Sources

Canopy Growth provides a breakdown of its net revenue into these five sources: Recreational: Business to Business; Recreational: Business to Consumer; Medical: Canadian; Medical: International; and Other. The recreational sources of revenue were new in FY 2019, when cannabis was first legalized in Canada.

Recreational: Business to Business

Canopy Growth’s business-to-business wholesale model was developed in response to the legalization of recreational cannabis in Canada, as the existing medical cannabis market was largely based on a business-to-consumer model. The business-to-business wholesale model sells large quantities of cannabis to provincial and territorial agencies, which then distribute the product to physical and online retail stores.

The segment posted net revenue of $34.9 million in Q1 FY 2021, making it the largest source of Canopy Growth’s revenue at nearly 32% of total net revenue. However, the segment’s net revenue for the quarter was down 10.2% compared to the same three-month period a year ago.

Recreational: Business to Consumer

Canopy Growth’s business-to-consumer model began with online medical sales directly to consumers. Following legalization, the company introduced physical retail stores, wherever permissible, for the recreational market, including for the Tweed and Tokyo Smoke brands.

Revenue for the segment was $9.3 million in Q1 FY 2021, making it the company’s smallest source of net revenue at about 8% of the total. Revenue for the segment declined by 12.3%, largely due to temporary closures of retail stores in response to the COVID-19 pandemic. 

Medical: Canadian

Canopy Growth’s medical division is operated by its Spectrum Therapeutics brand. It produces and distributes a wide variety of cannabis products aimed at helping customers with pain, mood, and sleep conditions. Canadian medical net revenue grew 19.0% in Q1 FY 2021 to $13.9 million, comprising nearly 13% of Canopy Growth’s total net revenue.

Medical: International

The Spectrum Therapeutics brand sells products in a number of other countries besides Canada. International medical net revenue grew 92.4% in Q1 FY 2021 to $20.2 million, comprising more than 18% of total net revenue.


Canopy Growth’s “Other” sources of revenue include: sales of vaporizer devices through its Storz & Bickel brand; sports nutrition beverages, mixes, proteins, gum and mints by the BioSteel brand; and revenue from beauty, skincare, wellness, and sleep products sold by the This Works brand. Other net revenue grew 70.7% in Q1 FY 2021 to $32.1 million, comprising about 29% of the company’s total net revenue.

Canopy Growth’s Recent Developments

Canopy Growth is laying off an unspecified number of workers at its Niagara-on-the-Lake and Smiths Falls locations, according to Canadian news network CTV News. The layoffs come after 500 people were laid off in March and another 85 in April earlier this year. CTV noted that the cuts were part of a company restructuring in response to a recreational pot market that was not developing as quickly as anticipated.

How Canopy Growth Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Canopy Growth and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Canopy Growth releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Canopy Growth discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Canopy Growth breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Canopy Growth Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
General Management          

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