Canopy Growth stock surged Tuesday after CEO David Klein said on an earnings call that momentum toward legalization in the U.S. could enable Canadian pot producer Canopy Growth to enter the cannabis market there as early as 2021.
“It’s past time that cannabis was legalized in the U.S. We’re quite encouraged by Senators Booker, Wyden, and Schumer beginning to talk about making cannabis part of their overall criminal justice reform work that they would prioritize during this Senate,” Klein told Cheddar.
Canopy stock hit a 52-week high Tuesday and closed up almost 12 percent. Shares of the Canadian cannabis producer have surged about 150 percent year-over-year.
“A lot of momentum [is] building for cannabis legislation to make its way through the process this year,” Klein said.
Canopy Growth also owns a number of consumer packaged goods and CBD brands like vape accessory company Storz & Bickel, sports drink maker BioSteel, and skincare company This Works and recently launched CBD products with lifestyle maven Martha Stewart. Klein said Stewart’s products are helping to broaden Canopy’s consumer base to first-time CBD users.
“Our U.S. CBD business is gaining momentum on the back of highly successful Martha Stewart CBD product launches,” Klein said during a call with analysts.
“Our consumer research shows that one-third of Martha gummy purchases were first time CBD consumers, indicating that we are already achieving our ambition with Martha to bring new consumers into the category,” he added.
Even if the U.S. doesn’t pass full-on legalization this calendar year, Canopy has the discretion to move forward with the Acreage acquisition. Klein said the company has been working with lawyers, its partners at banks and exchanges, and even its investors at Constellation Brands to proceed carefully and lawfully. Still, Klein told an analyst Tuesday he remains bullish on Canopy’s ability to step into the U.S. cannabis “at the right time.”
In spite of those losses and a challenging year of layoffs and restructuring Canopy has undergone under Klein’s leadership, executives say profitability is on the horizon. Lee said that Canopy’s ongoing cost-cutting program will help it achieve positive adjusted EBITDA in the second half of 2022.
“We believe the foundation is in place to accelerate our top and bottom line growth and achieve profitability during the second half of next fiscal [year],” Lee said.