Canopy Growth Corporation

About Tweed Inc. (Tweed)

Tweed operates out of the former Hershey's chocolate factory in Smiths Falls, Ontario, and operates the Tweed Farms greenhouse in Niagara-on-the-Lake. 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.

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.

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 will seek a final sales license as soon as its first crop has been harvested and tested for sale.

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

Tweed’s product lines include whole-flower cannabis, 10:1 Cannabis Oils, and complementary Tweed Pantry baking line of products.

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. 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. 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.

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.

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

Other advocacy work by Bedrocan Canada includes its success generating an e-petition to remove sales tax from medical cannabis, 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. The company continues to build on this program, announcing new initiatives like same-day shipping in Toronto.

CGC Timeline

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). This arrangement is pending approval by Mettrum's Board in January 2017.

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.)

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. By the time the arrangement closes, Canopy will have completed the purchase of the entire former Hershey’s chocolate factory, adding 50 percent more production space at that location. The takeover of Mettrum "if completed, will result 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."

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. 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.

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. For example, in early December 2016, Reuter's survey of four market analysts had indicated a consensus rating of Buy. 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).

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.