CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) is a Canadian MJ producer that has put up some impressive numbers over the past year. TWMJF has had 180% increase in revenue from the fiscal year 2016, and almost a 200% increase in net income for the same time, having <3.3> M loss and then having net income of 3M. Looking at it with a business operations perspective, this is telling of what the management thinks of as a good value adding move. They incurred losses so that they can acquire more assets and partnerships. In a sense, they are buying something low now and is developing it so that they can generate revenue and profit, not just to sell it at a higher price.
How they got here is interesting. Let’s look briefly at a few events that the company did as groundwork in 2015. On June 2015, Tweed Marijuana Inc, which is Canopy Growth Corporation previous name, acquired Canadian Licensed Producer Bedrocan Cannabis Corp., which is a 20 year old Medical Cannabis Market player. Furthermore, on October 2015, they have partnered with DNA Genetics, a global company with headquarters in the Netherlands which is known for their cannabis breeding and genetics program. These strategic acquisitions, while doing some short-term loss for the company, did prove to be a savvy decision as per the latest financial reports by the company.
Looking at it with an eye for future movement, we can expect legalization of marijuana in Canada through Prime Minister Justin Trudeau and with the Liberal Part of Canada having won a majority of seats in the Canadian House of Commons, there is high expectation for the stock price to rise up. The cannabis times expected the legalization effective on 2018, and more countries to follow suit.
There is also one more important thing to consider; CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) is slowly starting to make a global brand. Looking at a bigger economic perspective, with all things being equal, nations would prefer to have their products made locally. It will not be surprising; you can even say it is a matter of common sense, that they will put regulatory actions to try to limit or take away the probability of exports.
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Canopy is taking advantage of this world wide wave of cannabis legalization by scaling up.
The good thing with scaling up is it decreases cost of production, thus giving you a lower expense rate and higher profit margin, if all prices are the same and a price variance buffer so that prices can be lowered to get more business. Canopy has acquired in 2016 an additional 25,000 sq. ft. for a processing and storage building. For its greenhouse and operations, they now have a total of 665,000 sq. ft. greenhouse, from the 168,000 sq.ft. when they started.
Bruce Linton, CEO of Canopy Growth has stated: “This infrastructure completion and Health Canada approval milestone is a testament to the team at Tweed Farms who continue to execute our capacity-building as planned. We now have three distinct facilities licensed to produce a significant amount of finished goods, offering a growing number of patients a reliable, diverse and secure supply of cannabis and related oils products.”
As per the Newswire, using tissue culture propagation rather than clones clipped from mother plants, large plots of cost-effective greenhouse space can be brought online to satisfy demand.
Another thing of interest to note is that Canopy is still continuing its acquisitions. As per CBC :
Canada’s largest publicly-traded marijuana producer, Canopy Growth Corp., plans to purchase domestic competitor Mettrum in a deal worth $430 million.
The deal would grant Canopy Growth two Health Canada licences to grow marijuana for medical purposes, as well as Mettrum’s strains of marijuana and Mettrum Original’s line of hemp-based health products.
The company would be in a position to move quickly, if/when marijuana is legalized in Canada. The Cannabis Business Times also added: This was the final hurdle to clear and makes Canopy the largest cannabis player in Canada with six licensed facilities and a licensed production footprint of approximately 665,000 sq. ft. with significant acreage for expansion. Mettrum Health Corp will now be a wholly-owned subsidiary of Canopy Growth Corp. The Mettrum deal is just the latest piece of the puzzle for Canopy as it cements its leading market position. Prior to the Mettrum deal, Canopy acquired German pharmaceutical distributor MedCann GmbH Pharma and Nutraceuticals. Canopy is using its strong share price to acquire entities in all stock deals. For more news on TWMJF and other fast-moving stocks, please subscribe to FinanceRegistrar.com below.