Canopy Growth Corp. Want to stay the world's largest legal potters, and hearing CEO Bruce Linton tells it, has a detailed plan to stay there.
In a generally expected earnings report that arrived late on Thursday night, Canopy reported that its revenues were ballooned by nearly 300% in the first quarter of legally recreational weed sales in Canada. Shares of the canopy
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increased 4.4% in Friday trading.
After the company's telephone conference Friday morning, Linton jumped on the phone with MarketWatch and explained three priorities. Canopy believes will help achieve its goal. To Linton, a combination of the right people, smart investments and the proper allocation of the company's current lack of cannabis, work together to make the business fly.
"These three things go together ̵
Canopy has added a significant amount to employee base and reports that it has increased its workforce even more than revenue. While it had 700 employees last year, the total has increased 285% to 2,700 workers.
"You do what can be done, by a group of people," Linton said. "We scan continuously for new personnel – working towards evolving priorities. There is never a week passing by what we do not."
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The costs of the employees and their activities have grown significantly as well. General and administrative cost balloon to C $ 46.1 million ($ 36.4 million) from C 11.1 million in the quarter. Sales and marketing increased to $ 44.9 million from $ 9.4 million a year ago.
The second pillar of Canopy strategy is investment in infrastructure, commonly called investment expenditure. Canopy – reporting in International Financial Reporting Standards, or IFRS, instead of US General Accepted Accounting Practices, or GAAP Rules – uses a similar goal called property, plant, and equipment. Canopy recorded real estate, plant and equipment purchases and deposits of $ 495.2 million, up from $ 86.1 million in the quarter.
"In Canada, we made significant investments in a theory of how things [in the cannabis market] would open up," said Linton. "Now we do the same on a global basis. It is the capital allocation to a not-specific model."
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Linton points to investments in assets in South America as a top example of the company positioning itself for the future in a market with more unknowns than known at this time.
For businesses in the cannabis business, the marijuana is itself a scarce resource, and that means that Canopy must properly allocate it. Recreational cannabis needs to be distinguished between the various provincial buyers while ensuring adequate supply for medical patients in Canada. Canopy also exports pot and must keep sufficient amounts for its research and development divisions, which need pot for tasks such as clinical trials and product development.
"The first to get [marijuana] is science," Linton said in the earnings call. "The other is patient, the third is export and the fourth is recreational [cannabis]."
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in the fiscal third quarter, Canopy said it sold 8,288 kilograms of pots in the recreational market and equivalents and 1,814 kg for medical purposes. In the previous quarter, Canopy sold no recreational pot and 2,330 kilograms of medical pots. The company said it sold 204 kilos of medical pots in Germany in the third quarter.
The company does not say how much cannabis it uses for research and development and other scientific activities.
Linton tries to lead the company towards these priorities, along with co-director Mark Zekulin. Linton said Zekulin runs the show, has two degrees and one in math.
"In a very superficial way I cause the work and Mark does the job," Linton told as explaining how the duo split by the chief's job. "I'm actively involved on top of everything."
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Where he says Zekulin-passer handles everything related to operations and execution. Linton says Zekulin loves to put together structures, create organizational charts and find out what drives business, "key indicators" in business jargon.
A ritual that has served them well: Zekulin will call Linton on the commute to work – Linton says he wakes up extremely early in the morning – and once again on his return. In the day-to-day meetings, they co-responsible for anything that had to happen to the company.
Their work has probably paid off on Wall Street, especially after an agreement with Constellation Brands Inc.
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The Canopy share has received 112% over the past year, as the S&P 500 index
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