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Canopy Growth Corp Gets a Bigger Taste of the Edibles Market, Raises $25 Million
Posted By Sean Mason -July 24, 2017
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Agreement with Isodiol International further expands the product diversification strategy for Canopy Growth and prepares it in advance for a potential future recreational market
SmallCapPower | July 24, 2017: Canopy Growth Corporation (TSX: WEED) announced recently that it has inked a licensing agreement with Isodiol International Inc. (CSE: ISOL) for the manufacture and distribution of Isodiol’s marijuana-infused “Pot-O-Coffee” and “Pot-O-Tea” branded products in Canada and internationally. Although marijuana-infused edible products are not currently legal in Canada, the passing of Bill C-45 in April 2017 to legalize marijuana for recreational use on or before July 1, 2018 could present a large opportunity for Canopy Growth. Internationally too, only a few countries in South America (Uruguay) and Africa, and some states in the U.S. have legalized recreational use of cannabis.
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An early entrant into the Canadian cannabis market, Canopy Growth manufactures and distributes dried, oil and softgel cannabis products under diverse brands (Tweed, Mettrum, etc) for medical uses. These brands will evolve towards an adult lifestyle brand to best serve the needs of the future adult recreational market in Canada. The agreement with Isodiol further expands its product diversification strategy and prepares it in advance for a potential future recreational market that would allow edible and drinkable consumer products infused with cannabis elements.
Isodiol’s CEO Marcos Agramont said, “This distribution agreement has us positioned to increase our global footprint with the largest cannabis company in the world. We will continue to develop our Pot-O-Coffee product lines with ready to drink and cold brew products while working with Canopy Growth for international distribution channels. The Pot-O-Coffee brand is well recognized, and adding additional products to this line will continue to strengthen its market presence.”
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Canopy Growth also announced that it will raise $25 million in an equity financing private placement at $8.05 per share. The proceeds will be used to expand the production capacity of Canopy Growth, both domestically and potentially internationally, according to the Company.
For fiscal year 2017, Canopy Growth generated revenues of ~$40 million selling 5,140 kilograms of cannabis, and reported net loss of $16.6 million, or $0.14 per diluted share. At the current market price of $8.25, the market capitalization of Canopy Growth translates into $1.4 billion, or 35x its annual sales.
