Canopy Growth (NASDAQ:CGC) reported first-quarter fiscal 2027 net revenue of C$81.2 million, up 13% from the prior-year period, as the company recorded year-over-year growth across its cannabis and Storz & Bickel businesses.
Chief Executive Officer Luc Mongeau said the quarter marked the first time since he joined the company in January 2025 that Canopy reported year-over-year growth in each of its business lines. He attributed the progress to efforts undertaken during fiscal 2026 to sharpen operations, reduce costs and integrate MTL Cannabis, which Canopy acquired in March.
Revenue Growth Across Cannabis Channels
Canopy’s cannabis segment grew 14% year over year during the quarter. Canadian medical cannabis revenue rose 22% to C$25.8 million, driven by an increase in patient counts over the past year. The business has been expanded through MTL Cannabis’ Canada House clinics and Abba Medix online distribution platform.
Mongeau said Canopy continued to add patients and increase the number of orders filled during the quarter, supporting its position as the largest Canadian medical cannabis provider. He noted, however, that the company has been affected by reduced reimbursement rates from Veterans Affairs Canada, given its focus on veteran care.
Chief Financial Officer Tom Stewart said the company is working to offset those reimbursement changes through measures including integrating customer-care functions with MTL, renegotiating supplier and partner pricing, and offering more large-format products that can provide greater value to patients while reducing company costs.
Canadian adult-use cannabis revenue increased 10% to C$29.7 million. Mongeau said the business benefited from a strengthened portfolio, including the MTL Cannabis brand, which Canopy intends to distribute more broadly across Canada. According to the company’s cited market-share data, Canopy moved to sixth overall from eighth previously, while reaching a top-two position in premium flower and infused pre-rolls and the top position in softgels.
International cannabis revenue rose 10% year over year, marking Canopy’s third consecutive quarter of sequential international growth. The company cited particularly strong first-quarter performance in Poland, where it said it is now a top-three supplier.
Canopy expects to begin shipping flower to the United Kingdom imminently, with revenue contributions expected in the second half of fiscal 2027.
Margins Improve as Storz & Bickel Returns to Growth
Adjusted consolidated gross margin reached 31%, compared with 25% a year earlier, a 600-basis-point improvement. The cannabis segment reported adjusted gross margin of 26%, while reported consolidated gross margin was 22%, reflecting a C$2.6 million non-cash inventory flow-through charge related to the MTL acquisition.
Storz & Bickel revenue rose 6% to C$16.1 million. Its gross margin increased to 48% from 29% in the prior-year quarter, supported by operational and cost-efficiency initiatives as well as tariff refunds recognized during the period. Stewart said margins would have been substantially above the prior year even without the tariff-related benefit.
SG&A expenses increased C$2.1 million from the prior-year quarter, despite the addition of MTL’s operations. Stewart said the company was actively executing against C$8 million in annualized MTL-related synergies, up from C$6 million reported in the prior quarter. Canopy’s stated target is C$10 million in synergies within 18 months of the March transaction closing, and Stewart said there could be upside to that target in both timing and dollar amount.
Adjusted EBITDA loss narrowed 59% from the prior year to C$3.2 million. Management reiterated that it expects to achieve positive adjusted EBITDA during fiscal 2027.
Cultivation, Supply Chain and European Expansion
Management identified cultivation efficiency as a central component of future revenue growth and margin expansion. Mongeau said Canopy is implementing improvements to growing techniques, lighting and environmental controls, aided by MTL’s cultivation expertise. Early results have included improvements in yields, THC levels and cost per gram, according to the company.
Canopy has begun cultivating MTL strains at its Kincardine facility under MTL master growers and is introducing new strains to expand its genetic portfolio. Mongeau told analysts that the financial impact from cultivation improvements should begin to emerge toward the end of the second quarter and the beginning of the third quarter, as production cycles are completed.
The company also launched an end-to-end supply-chain initiative after the quarter ended to streamline processes, resize its distribution footprint and optimize labor.
For international markets, Canopy said it has an EU GMP-compliant flower supply chain spanning cultivation at Kincardine through distribution in Germany. It has completed an EU GMP inspection for finished-product and Cannabis 2.0 manufacturing at its Smiths Falls facility and expects certification during fiscal 2027. Mongeau said the approval would support an end-to-end supply chain for products intended for international markets.
Stewart said Canopy is targeting adjusted gross margin in the mid-30% range in the near term, potentially at a higher rate by the end of the fiscal year. Longer term, he said the company aims to approach margins closer to 50%, though he described that objective as further in the future.
Canopy ended June 30 with C$337 million in cash. Cash used in operating activities totaled C$25 million in the first quarter, though Stewart said that level was above the expected fiscal-year run rate because of working-capital increases and one-time transaction and restructuring costs that are expected to decline over the year.
Management said it expects modest capital expenditures to support cultivation investments, while maintaining that its existing operational assets are sufficient and that it does not anticipate greenfield facility construction.
About Canopy Growth (NASDAQ:CGC)
Canopy Growth Corporation is a leading Canadian cannabis company engaged in the production, distribution and sale of both medical and recreational cannabis products. Headquartered in Smiths Falls, Ontario, the company cultivates a diversified portfolio of offerings that includes dried flower, pre-rolled joints, oils, softgel capsules and edibles. Canopy Growth also markets derivative products such as beverages and wellness formulations under a range of brands, aiming to serve both patient and adult-use markets.
The company operates through multiple subsidiaries, including Tweed Inc, Spectrum Therapeutics and Tokyo Smoke, each targeting distinct consumer segments.
