Canopy Growth Corporation

Canopy Growth Corporation

Type	Medical Marijuana
Traded as	TSX: WEED
Industry	Medical Marijuana
Predecessor	Tweed Marijuana Inc.
Founded	2014 (2014)
Founder	Bruce Linton
Headquarters	Smiths Falls, Ontario, Canada
Area served	Canada
Key people	Bruce Linton, John K. Bell, Barry Fishman, Murray Goldman, Chris Schnarr, Mark Zekulin, Mark Wayne, Tim Saunders Amanda Daley, Hilary Black, Rade Kovacevic, Brian Greenleaf
Products	Medical cannabis
Website	www.canopygrowth.com www.tweed.com www.bedrocan.ca

Canopy Growth Corporation (CGC), formerly Tweed Marijuana Inc., is a medical marijuana company based in Smiths Falls, Ontario. It is the first federally regulated, publicly traded cannabis producer in North America, traded on the Toronto Stock Exchange as WEED. Since marijuana is currently legal in Canada only for medical purposes, growers such as CGC are licensed by Health Canada under the Access to Cannabis for Medical Purposes Regulations (ACMPR).^[1] A multi-licensed, geographically diverse marijuana producer, the company was described as "one of the world’s — and Canada’s first — premier exporters of marijuana" by the Financial Post news organization in December 2016.^[2]

CGC originally operated as Tweed Marijuana Inc. but rebranded to Canopy Growth Corp. in September 2015 with two established brands.^[3] Specifically, CGC is the parent company of licensed cannabis producers Tweed Inc., Tweed Farms Inc., Bedrocan Canada Inc., as well as newly acquired Mettrum Health Corp, giving CGC a combined growing platform of over 665,000 sq. ft. of production space.^[4][5] The company has also acquired part or full ownership of other cannabis producers and distributors.

About Tweed Inc. (Tweed)

Tweed operates out of the former Hershey's chocolate factory in Smiths Falls, Ontario,^[6] and operates the Tweed Farms greenhouse in Niagara-on-the-Lake.^[7] 1 Hershey Drive in Smiths Falls consists of eight buildings representing over 470,000 square feet of manufacturing and distributing space, situation on approximately 39.6 acres of land. Tweed's operations occupy 180,000 square feet of this space, 168,000 of which is licensed for marijuana production.^[6] In January 2017, Tweed purchased the entirety of 1 Hershey Drive giving them all 470,000 sq ft, and have begun expansion projects for more production space.^[8]

Tweed Farms is located in the heart of Southwestern Ontario’s wine country in Niagara-on-the-Lake. By using the sun’s energy and closed loop water systems, the greenhouse at Tweed Farms is an environmentally friendly operation capable of growing large quantities of natural medical marijuana. The site currently houses 350,000 square feet of greenhouse.^[6]

In March 2016, Tweed Farms received its license to produce, possess and ship dried marijuana. The license completes a successful phase of infrastructure enhancements that have increased the independence of the Tweed Farms site and transformed it from a broad-scale production facility to a vertically integrated campus capable of growing, trimming, curing and storing product. A 25,000 sq. ft. processing and storage building has been added to the existing 350,000 sq. ft. greenhouse. Tweed Farms acquired its license to sell dried medical cannabis in October 2016. ^[9][10]

Tweed was voted #1 best customer service at the 2015 Canadian Cannabis Awards.

Tweed’s line of products include whole-flower cannabis, milled cannabis, 10:1 Cannabis Oils, and new soft-gel cannabis oil capsules.^{[11] [12]}

About Bedrocan Canada Inc. (Bedrocan)

Bedrocan BV pioneered medical cannabis in Holland through decades of selection and refinement, leading to standardized, whole bud cannabis strains.^[13] Bedrocan Canada supplies the same standardized strains to the Canadian market through exclusive licensing rights to the American continents, an arrangement it will also enjoy for all future genetic advancements. Due to its consistency over time, Bedrocan’s strains have been used in clinical research in seven European countries.^[14] Bedrocan Canada recently launched one of the largest clinical cannabis studies in the world, the EQUAL Study, to evaluate quality of life before and after medical cannabis use.^[15]

Bedrocan Canada’s facility is based in Toronto. Its history rooted in the Netherlands-based company Bedrocan BV, the trusted supplier of cannabis to the Dutch Ministry of Health for 14 years. The company has been growing cannabis for over two decades, and is the only company in the world that has the proven capability of producing standardized whole-flower medical cannabis. Through a combination of stable plant genetics and proprietary, automated, high-tech production techniques, Bedrocan has the capacity to grow varieties that contain consistent levels of cannabinoids and terpenes every time.^[13]

Bedrocan's contributions to medical marijuana research include its participation in the EQUAL Study.^[15] Bedrocan and Tweed have also provided funding for the Quebec Cannabis Registry and its associated McGill University research initiative.^[16]

Other advocacy work by Bedrocan Canada includes its success generating an e-petition to remove sales tax from medical cannabis,^[17] and a program dedicated to advancing insurance coverage for cannabis.

Bedrocan announced the start of True Compassionate Pricing in January 2016, offering all its products for $5 / gram.^[18][19] The company continues to build on this program, announcing new initiatives like same-day shipping in Toronto.^[20]

CGC Timeline

• In January 2014, Tweed Marijuana Inc. was granted the license to legally produce marijuana for registered users of cannabis.^[21]
• In April 2014, the "Marihuana for Medical Purposes Regulations (MMPR)" came into effect, with Tweed's NOTL facility being the first approved.
• In June 2014, the Company acquired Prime1 Construction Services Corp.
• August 2014, Chuck Rifici was removed by the board from his position as President of Tweed Marijuana Inc.
• February 2015, Tweed Marijuana Inc. launches pilot project with Indoor Harvest Corp. to install a state-of-the-art aeroponic system for research and development.
• June 2015, Tweed acquires Canadian Licensed Producer Bedrocan Cannabis Corp.^[22]
• September 2015, Tweed Marijuana Inc. renames itself Canopy Growth Corporation, with Tweed Inc., Tweed Farms Inc. and Bedrocan Canada Inc. remaining separate subsidiaries under the CGC parent company.
• October 2015, Tweed announces a partnership with DNA Genetics, one of the most widely recognized and acclaimed global brands in cannabis breeding and genetics.
• January 2016, Bedrocan announces the start of True Compassionate Pricing, offering all its products for $5 / gram.^[18]
• February 2016, Tweed strikes a deal with rapper and global cannabis icon Snoop Dogg,^[23][24][25] in a deal that will grant the company exclusive rights to use certain content and brands owned by the rapper’s company, LBC Holdings.
• February 2016, Tweed receives its license to sell cannabis oils, launching the 10:1 Cannabis Oils product line. The company also announces it is founding an education fund to promote safe use, starting with a $50,000 contribution and donating $1 from every oil bottle sale to the fund.^[26]
• March 2016, Tweed Farms is now licensed to produce, possess and ship dried marijuana at its facilities in Niagara-on-the-Lake, Ontario. The license completes a successful phase of infrastructure enhancements that have increased the independence of the Tweed Farms site and transformed it from a broad-scale production facility to a vertically integrated campus capable of growing, trimming, curing and storing product. A 25,000 sq. ft. processing and storage building has been added to the existing 350,000 sq. ft. greenhouse. Tweed Farms will seek a final sales license as soon as its first crop has been harvested and tested for sale.^[10]
• May 2016, Tweed announces a partnership with AusCann Group Holdings Ltd. (AusCann), an early leader in the nascent Australian medical cannabis industry and the first international deal of its kind for a Canadian cannabis company.^[27]
• May 2016, Bedrocan Canada hosts its inaugural masterclass for medical professionals.^[28]
• May 2016, Tweed and Bedrocan announce plans to fund a national campaign to raise awareness of impairment in relation to operating a motor vehicle under the influence of cannabis. The campaign will be developed and administered by two of the country's leading organizations in promoting evidence based drug policy and safe driving, the Canadian Drug Policy Coalition (CDPC) and Mothers Against Drunk Driving (MADD Canada).^[29]
• June 2016, Canopy Growth Corporation receives conditional approval to list shares on the TSX, graduating from the TSX Venture Exchange.^[30]
• July 2016, CEO Bruce Linton divests 400 K in shares to cover financial obligations related to ownership in the Tweed building and related financing that went unaddressed after more than three years.^[31]
• August 2016, the government of Canada releases new regulations governing cannabis production that re-instate a patient's right to personally produce their own cannabis.^[32][33]
• November 2016, became the first company in the marijuana industry to achieve elusive $1 billion "unicorn" status. They had a $2 billion valuation on November 16, one week after eight US states passed ballot initiatives legalizing marijuana in some form.^[34]
• January 2017, Tweed acquires entire facility at 1 Hershey Drive in efforts to expand production space. ^[35]
• February 2017, its valuation was $943 million.^[34] According to the 2016 year end report, the patient base increased by 260 per cent and revenue increased by about 180 percent vs. 2015. The company's acquisition of competitor Mettrum Health Corp., for $430 million, was awaiting final regulatory approval.^[36]
• March 2017, added to TSX/S&P composite index ^[37]
• May 2017, acquires Tweed Grasslands, formally rTrees Producers Limited Inc., awaiting licensing from Health Canada ^[38]

Acquisitions and expansion

Subsequent acquisitions for this corporation included Vert Medical, the German cannabis distributor MedCann and a majority interest in Quebec's Groupe H.E.M.P.CA Inc. In early December 2016, Canopy Growth Corp. announced a friendly takeover bid of another licensed Ontario-based producer, Mettrum Health (CVE:MT). The deal, pending the approval of Mettrum's board, was closed in January 2017. ^[39].^[40]

In addition to sales in the domestic market, Canopy Growth began selling medical cannabis products in Germany and Brazil in 2016. The stock price of CGC increased dramatically in the last quarter of 2016. However, the company was operating at a loss, presumably because of the significant expenditures it was making to acquire competitors in preparation for significantly increased cannabis demand by the recreational use market expected to commence in 2018. (As discussed in Cannabis in Canada, legislation to legalize cannabis for recreational use is expected to be introduced in Canada's federal Parliament in spring 2017 with actual sales to casual users likely to commence in January 2018.)^[41][42]

On January 27, 2017, Canopy and Mettrum Health Corp. announced that the shareholders of both had approved the takeover of Mettrum by Canopy for $430 million. The deal was awaiting approval by the Ontario Superior Court of Justice. At around the same time the deal had closed, Canopy completed the purchase of the entire former Hershey’s chocolate factory, adding 50 percent more production space at that location.^[43] The takeover of Mettrum has resulted in "the creation of a world-leading diversified cannabis company with six licensed facilities and a licensed production footprint of approximately 665,000 sq. ft. with significant acreage for expansion."^[44][45]

Increased sales, profitability

Canopy Growth's patient base increased by approximately 260 per cent and revenue (with $3 million in net income) increased by about 180 percent in the year ending in December 2016 (vs. 2015). This was the first time the company had generated a profit. The results would have been even better but the company had difficulty maintaining adequate stock in some high-demand categories such as mid-to-high THC level products and oils.^[46] Financial analysts have predicted that the "shortfall of supply" recently experienced by producers such as Canopy Growth would continue "in the near term" (until about 2020 perhaps) after legalization of marijuana in Canada. That is likely to increase the product's selling price and the profits for producers.^[47][48]

Previously, Canopy Growth had been operating at a loss (-$3.3 million in income in 2015, for example) partly because it was using funds for production expansion and to acquire competitors in preparation for significantly increased cannabis demand by the recreational use market in early 2018. Even after the 2015 results had been published, some analysts remained positive about the company's future value.^[49] For example, in early December 2016, Reuter's survey of four market analysts had indicated a consensus rating of Buy.^[50] Prior to the release of the 2016 results, the company had a valuation of $1.6 billion. On 2 February 2017, Canopy shares had more than tripled in the previous 12 months, and stood at $10.20 at 11:10 a.m. on the Toronto Stock Exchange (ticker WEED).^[51]

The stock price continued to increase, to over $12 in the following days. On 14 February, after the year end report had been was released, Canopy Growth's share price fell seven percent, but even then, it stood at $12.09.^[52]

External links

• Canopy Growth Website
• Tweed Website
• Bedrocan Website
• Tour of Smiths Falls Facility - Vice Magazine
• Tour of Smiths Falls Facility - The New York Times

References