Canopy Growth Company (NYSE: CGC), the Ontario-based cannabis behemoth, announced its second quarter earnings for fiscal year 2022 this past Friday. The company struggled throughout Q2 to stabilize its share of recreational cannabis in Canada’s evolving market, a challenge which will remain a priority for CGC in its upcoming quarters.

In addition, Canopy will focus on future growth by preparing its products for the anticipated widespread legalization of cannabis in the US. Products such as the company’s portfolio of CBD and THC beverages will lead the way for Canopy in the United States’ budding market.

CGC reported a 3% year-over-year decline in net revenue, earning $131 million during its most recent second quarter. However, the company’s net cannabis revenue increased by 1%, coming in at $95 million. When the impact from Canopy’s acquired businesses is taken out of the equation, the company’s net revenue experienced a decline of 13%, while cannabis revenues experienced a 14% decline compared to the second quarter of F21.

Canopy is now looking towards the US for growth opportunities. In Canada recreational cannabis has been legal since 2018. By contrast, in the United States it is only legal in less than half of the country and decriminalized in an additional handful of states. Cannabis laws and regulations in the US are constantly changing but legalization on a federal level is unlikely in the near future. CGC hopes to carve out a place for itself in the US while the market is still in its infancy.

“In new industries where the potential is immense, progress is rarely a straight line. With a focused strategy, a foundation for growth, and our burgeoning U.S. ecosystem, Canopy is uniquely positioned to win as the industry matures,” stated David Klein, the Chief Executive Officer for Canopy Growth Corporation. Klein is also the former Chief Financial Officer for Constellation Brands.

For Canopy, slow legalization in the US means the company must create brand recognition in states where the products are legal while continuing to grow its product lines in Canada. With that in mind, Canopy Growth recently launched two new THC beverages, Tweed Iced Tea and Tweed Fizz Seltzer.

According to Canopy Growth’s website, Tweed is “one of the most recognized cannabis brands in the world.” The company insists, “Tweed doesn’t just sell cannabis, it facilitates a conversation about a product we’ve all heard about but haven’t met intimately yet.”

Canopy Growth launched Tweed Iced Tea in Canada during the company’s first quarter of F22. The THC-infused tea comes in two varieties including Lemon and Raspberry. Each flavor contains 5mg of THC distillate. THC, or tetrahydrocannabinol, is the chemical compound that creates cannabis’ psychoactive effects.

In Q2 the company followed up on Tweed Iced Tea’s success with the introduction of Tweed Fizz Seltzer. The sparkling beverages are available in Watermelon and Mango flavors, and like the brand’s iced teas, they each contain 5mg of THC distillate.

Tweed’s iced teas and seltzers are not yet available in the United States. However, Canopy Growth did launch Quatreau, a line of CBD-infused sparkling water, in the US this March after an impressive debut in Canada last year. Quatreau has quickly become the highest performing CBD beverage on the Canadian market.

The brand’s seltzers come in four flavors including Passionfruit + Guava, Cucumber + Mint, Blueberry + Acai and Ginger + Lime. The beverages contain 20mg of hemp-based CBD isolate and are currently available in 33 states via the company’s ecommerce site. Quatreau does not contain THC.

Klein explained during an interview with Bloomberg News, “Just as hard seltzer disrupted beer by providing a lighter, low-calorie alternative, we believe cannabis beverages will be an attractive option for what have traditionally been alcohol-driven occasions and mood states.”

As the United States eases its cannabis restrictions, Canopy Growth Corporation goes into Q3 readying its THC and CBD-infused beverages to take over the US market.

Shirani Jayasuriya
Latest posts by Shirani Jayasuriya (see all)