A significant spike in expenses led Canopy Growth Corp. to quadruple its first quarter loss, but the company’s chief executive officer is defending the spending spree as prudent preparation for the legalization of recreational marijuana next year.
The Smith’s Falls, Ont.-based medical marijuana company, the first in Canada to hit a billion-dollar valuation, reported a $21.1-million loss in the three months ending Mar. 31 compared with a $5.1-million loss in the same period last year despite nearly tripling its revenue to $14.7 million. Its operating expenses also tripled year-over-year to $23.4 million from $7.7 million.
Canopy’s stock price dropped more than 6 per cent before closing down 47 cents at $7.99 in Toronto Tuesday despite reassurances from CEO Bruce Linton. In a conference call with analysts, he said the extra spending on consultants, staff and construction to expand its facilities, along with costs associated with the $430-million acquisition of Mettrum, are part of the company’s strategy to be “best ready and best positioned” for the recreational market. The federal government committed in April to legalization by July 1, 2018.