Canopy Growth, a Canadian cannabis company, said it is accelerating its US growth strategy based on expectations of “significant reform” led by the Democratic party now that it controls two branches of government.
On Feb. 1, Democratic senators Chuck Schumer, Cory Booker, and Ron Wyden announced their commitment to legislation that addresses the historic impact of US drug policies on minority communities while also implementing federal taxes and regulations. That followed November’s elections when four new states legalized recreational marijuana, and two legalized medicinal use. Several states have also generated significant tax revenues and new jobs from the industry, which have been particularly prized during the economic slowdown caused by the pandemic.
During a call with analysts on Feb. 9, Canopy Growth CEO David Klein said Democratic control of the White House, as well as both chambers of Congress, gave the company “a unique window of opportunity.”
“We anticipate that this legislation will include comprehensive reform to ensure restorative justice, protect public health, and implement responsible taxation while ending cannabis prohibition,” he said. “We believe that this legislative package or a combination of reform measures could allow Canopy to enter the US THC market during calendar 2021.”
Canopy now sells CBD products derived from hemp in the US but not cannabis or cannabis products containing more than 0.3% THC, the intoxicating compound in the drug, which are still illegal under federal law.
Canopy was the first company to be federally regulated, licensed, and publicly traded in North America, debuting on the Toronto Stock Exchange in 2014. It currently has more than 4,400 employees, is headquartered in Smith Falls, Ontario, and also trades on the Nasdaq stock exchange.
In 2018, the company received a $4 billion investment from Constellation Brands, a major US producer and marketer of beer, wine, and spirits. The company has benefited from Canada’s national legalization in 2018, as well as higher demand for cannabis products during the pandemic. For its latest quarter, Canopy Growth reported sales of C$152.5 million, a 23% increase compared to the third quarter of 2020. On Feb. 8, the company also announced it was part of the United States Cannabis Council, a new industry coalition.
Canopy’s share price has more than doubled in the past year, with sharp increases following the legislative announcement on Feb. 1 and after its most recent earnings report on Feb. 9. However, the company’s shares fell by more than 22% on Feb. 11, to close at $40.65 on the Nasdaq.