By Chloe Aiello
On the heels of less-than-stellar earnings for the world's largest cannabis company, Canopy Growth CEO Bruce Linton said the company is gearing up for the next phase of its U.S. hemp invasion: bringing products to market.
"We think we are making products that will launch in Q4, that will appeal to corner stores, big box stores ー people who want to be sure the product's legit, that it's been tested, and it's not going to be a recall embarrassment," Linton told Cheddar on Friday.
Canopy Growth ($CGC) reported fourth quarter earnings and revenue on Thursday that disappointed investors. Despite growing its annual net revenue nearly 200 percent to $226.3 million in fiscal 2019, the company reported a substantial loss and its gross margins dropped to 16 percent. Linton told Cheddar the narrowing margins were a result of expenses incurred from Canopy's rapid growth, adding that the "pain of growth in Canada has now been largely undertaken, so we think we can ramp up our margins back to normal by the end of the fiscal year."
Further south, Canopy has set its sights on hemp and CBD. The company announced its intention to build a hemp hub in upstate New York, earlier this year, and is reportedly building out operations in seven states. In an interview with Bloomberg, following the company's Thursday evening earnings report, Linton said he expects pet products to come as soon as the first quarter of 2020, with skincare products, beverages, hemp-based foods, and possibly vape products to hit U.S. shelves by the fourth quarter.
"The company's kind of working on the idea that the cannabis sector is never going to get smaller, because it's just beginning to be governed," Linton said.
Canopy previously announced a partnership with Martha Stewart to help the company develop food, cosmetics, and pet products. Earlier this week, Stewart revealed more details about the partnership, describing her entry into CBD and hemp as "enlightening" at World Cannabis Congress in New Brunswick, Canada.
Canopy also clocked a major milestone in its push to acquire U.S. multi-state operator Acreage Holdings this week. Shareholders from both Canopy and Acreage approved the deal ー with 99 percent voting in favor ー but ultimately the companies still need cannabis to be legalized or permissible on the federal level in the U.S. to close the deal.
Despite that hurdle, Linton said he's in no rush for the U.S. to fully legalize cannabis.
"We wouldn't mind 18 months or so of the current status quo, so that Acreage can use some of the brands and expertise from Canopy to build even more successful businesses in all those 20 states, and then make it federally regulated and a little bit bigger with more [recreational]," he said.