Canopy Growth Reports Second Quarter Fiscal 2021 Financial Results

Achieved record quarterly net revenue of $135 million

Net Loss of $97 million; Adjusted EBITDA loss of $86 million, a 43% improvement versus Q2 FY20

Implementing initiatives to capture $150-$200 million of savings across our cost structure

Increased market share by 200 basis points in Canadian recreational market based on our proprietary market share tracker

Building momentum in the U.S. and establishing foundation for long-term leadership position

SMITHS FALLS, ON, Nov. 9, 2020 /PRNewswire/ - Canopy Growth Corporation ("Canopy Growth" or the "Company") (TSX: WEED) (NYSE: CGC) today announced its financial results for the second quarter fiscal 2021 ended September 30, 2020. All financial information in this press release is reported in millions of Canadian dollars, unless otherwise indicated.

"Our renewed strategy of winning consumer mindshare, along with increased agility and execution, has resulted in record net revenue for the second quarter and momentum across key areas of business," said David Klein, CEO. "Canopy Growth is positioned for continued growth as we establish a strong leadership position that is showcased through our vast portfolio of differentiated brands and products - including our industry leading cannabis-infused beverages."

"We saw another quarter of improvement in our operating expense ratio while our marketing and R&D investments are being re-directed to drive sales," added Mike Lee, CFO. "Importantly, our end-to-end review has identified cost savings opportunities in the range of $150-$200 million across cost of goods sold, general and administrative expenses, and inventory, and efforts are underway to quickly capture value. Leveraging ongoing improvements across our business, we are accelerating our path to profitability, notably in our largest market, Canada."

Second Quarter Fiscal 2021 Financial Summary

                            Net revenue          Gross margin  Net loss            Adjusted  Free cash flow(2)
                                        percentage                       EBITDA(1)

                   Reported      $135.3                    19%   $(96.6)             $(85.7)           $(190.4)


        vs. Q2 2020                 77%    
            1,400 bps    (140%)                 43%                57%


                            (1) Adjusted EBITDA is a non-
                             GAAP measure. See "Non-GAAP

                            2 Free cash flow is a non-
                             GAAP measure. See "Non-GAAP

Second Quarter Fiscal 2021 Corporate Financial Highlights

    --  Revenues: We achieved record quarterly net revenue of $135.3 million in
        Q2 2021 driven by increase in Canadian recreational revenue, continued
        strength in Storz & Bickel ("S&B") vaporizer sales and ThisWorks, and
        contribution from BioSteel, which was acquired in October 2019. Growth
        versus the prior year period also benefited from favorable comparison,
        as Q2 2020 results included a $32.7 million charge for returns, return
        provisions and pricing allowances primarily related to restructuring the
        Company's recreational softgel & oil portfolio. Adjusting for Q2 2020
        charge, net sales increased 24% versus Q2 2020.
    --  Gross margin: Gross margin of 19% was up 1,400bps versus Q2 2020. Gross
        margin during Q2 2021 compared to Q1 2021 was impacted by an unfavorable
        business mix driven by lower contribution from International Medical
        business and continued lower production output, partially offset by
        lower inventory adjustment.
    --  Operating expenses: Total SG&A ("SG&A") expenses declined by 19% versus
        Q2 2020, driven by year-over-year reductions in Sales & Marketing and
        General & Administrative ("G&A") expenses, partially offset by higher
        Research & Development ("R&D") expenses. Sales & Marketing expense
        decline of 30% reflects lower compensation expenses resulting from
        corporate restructuring actions taken earlier in the year, delayed or
        cancelled marketing activities and reduced travel-related expenses due
        to the COVID-19 pandemic. G&A expenses decreased by 26%, while R&D
        expenses rose by 19% mainly driven by ongoing research studies that
        commenced after Q2 2020. Excluding Acquisition-related costs of $3.5
        million, SG&A expenses declined by 20% versus Q2 2020. Share-based
        Compensation expenses decreased 76% over Q2 2020.
    --  Net Loss: Net loss of $96.6 million in Q2 2021, a $339.2 million wider
        loss versus Q2 2020, was driven by lower other income.
    --  Adjusted EBITDA: Adjusted EBITDA loss was $85.7 million in Q2 2021,
        compared to a loss of $150.4 million in Q2 2020 driven by higher revenue
        and lower operating expenses.
    --  Cash Position: Cash and Short-term Investments amounted to $1.722
        billion at September 30, 2020, representing a decrease of $254 million
        from $1.976 billion at March 31, 2020 reflecting the EBITDA loss and
        capital investments.

Business & Operational Highlights

    --  Strengthened competitive positioning in Canada recreational market:
        --  Our Canada recreational market share (covering British Columbia,
            Ontario, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova
            Scotia, Prince Edward Island and Newfoundland & Labrador) increased
            to 15.5% during Q2 2021, up 200 bps versus Q1 2021, based on our
            internal market share tracking tool. Notably, our market share grew
            by 190 bps in Ontario and 140bps in British Columbia, while it
            declined by 40 bps in Alberta in Q2 2021 vs Q1 2021.
        --  We grew our market share in the flower category by 320bps during Q2
            2021 vs. Q1 2021. Twd. continued to drive market share gains in the
            growing value flower segment, as market share of value flower sold
            in Ontario more than doubled to 13.7%.
        --  Established leadership position in cannabis-infused beverage segment
            during Q2 2021, commanding a 54% dollar share with five Ready-to-
            Drink ("RTD") THC cannabis beverages under Tweed, Houseplant and
            DeepSpace brands in the Canadian recreational market. We launched
            Quatreau RTD CBD beverages across Canada in the current quarter. To
            date, over 2.0 million beverage units have been shipped since late
            March 2020.
        --  Opened 9 retail stores in Alberta during Q2 2021, bringing the total
            number of stores carrying the Company's award-winning Tweed and
            Tokyo Smoke retail banners in Canada to 48 (32 Corporate-owned) at
            the end of Q2 2021. One additional retail store opened in Alberta in
            October 2020.
    --  Stepped up activities in the U.S. market to drive accelerated revenue
        --  Launched Martha Stewart branded health and wellness CBD gummies, oil
            and soft gels in September 2020. The launch generated significant
            earned media, which is already driving strong consumer demand.
            Martha Stewart CBD products are now expanding into brick-and-mortar
            stores, with a significant number of stores are expected to be added
            in the coming months.
        --  BioSteel signed distribution agreements with leading beverage
            distribution companies, Reyes Beer Division and Manhattan Beer,
            alongside several other partnerships through Constellation Brands'
            distribution network. These distribution agreements will bring
            BioSteel's ready-to-drink, electrolyte-packed sports hydration
            beverages to consumers, covering 100% of the US market through
            direct-store-delivery (DSD) network by early 2021. BioSteel is
            currently in discussion with a number of large national accounts and
            expects to have products on shelf across Food/Drug/Mass as well as
            Convenience & Gas channel over the course of calendar year 2021.
        --  Storz & Bickel (S&B) vaporizer products continued to see strong
            growth driven by both distribution gains and reorders from new US
            distributors. We have added an additional shift to keep up with
            demand and plan to triple production capacity by next summer.
        --  This Works strengthened direct (, and
            third-party ecommerce sales channels and launched StressCheck hand
            sanitizer in U.S. with additional product lines and expanded
            distribution expected in the coming months.
    --  The Company and Acreage Holdings, Inc. ("Acreage") implemented an
        amended arrangement between the two companies. The amended arrangement
        reduces the total purchase obligation for Canopy and provides
        flexibility to majority or total ownership of Acreage upon the
        occurrence (or waiver by the Company) of changes in federal laws in the
        United States to permit the general cultivation, distribution and
        possession of marijuana (as defined in the relevant legislation) or to
        remove the regulation of such activities from the federal laws of the
        United States. Companies announced initial plans for Acreage to launch
        THC-Infused beverages in the states of California and Illinois in the
        summer of 2021.
    --  Continuing to assess the impact of the COVID-19 pandemic, with a focus
        on the health and safety of our employees, business continuity and
        supporting our communities.

Second Quarter Fiscal 2021 Financial and Operational Review

Revenue by Channel

                     (in millions of
                      Canadian dollars,
                      unaudited)           Q2 2021 Q2 2020  vs. Q2 2020

                     Canadian recreational
                      net revenue

        -Business to
         business(1)                         $42.2     $8.8          380%

        -Business to consumer                $18.7    $13.1           43%


                                             $60.9    $21.9          178%

                     Canadian medical net
                      revenue(2)             $13.9    $13.0            7%

                     International medical
                      revenue                $17.5    $18.1          (3%)


                                             $31.4    $31.1            1%

                     Cannabis net revenue    $92.3    $53.0           74%

                     All other revenue       $43.0    $23.6           82%


                     Net revenue            $135.3    $76.6           77%


                            (1) Reflects excise taxes of
                             $14.2 million and other revenue
                             adjustments of $3.8 million for
                             Q2 2021 (Q2 2020 -$7.8 million
                             and $32.7 million,

                            (2) Reflects excise taxes of $1.4
                             million (Q2 2020 -$1.2

Revenue by Form

                     (in millions of
                      Canadian dollars,
                      unaudited)           Q2 2021   Q2 2020   vs. Q2 2020

                     Canadian recreational
                      net revenue

       - Dry bud(1)                         $63.9      $59.0             8%

        -Oils and softgels(1)                 $7.0       $3.4           106%

        -Cannabis 2.0
         products(2)                          $8.0 

        -Other revenue
         adjustments(3)                     $(3.8)   $(32.7)           88%

        -Excise taxes                      $(14.2)    $(7.8)         (82%)


                                             $60.9      $21.9           178%

                     Global medical net

       - Dry bud                             $9.0       $9.6           (6%)

        -Oils and softgels                   $23.1      $22.7             2%

        -Cannabis 2.0
         products(2)                          $0.7 

        -Excise taxes                       $(1.4)    $(1.2)         (17%)


                                             $31.4      $31.1             1%

                     Cannabis net revenue    $92.3      $53.0            74%

        All other revenue                    $43.0      $23.6            82%


                     Net revenue            $135.3      $76.6            77%


                            (1) Excludes the impact of other
                             revenue adjustments.

                            (2) Cannabis 2.0 products include
                             cannabis-infused chocolates,
                             cannabis-infused beverages, and
                             cannabis vape products (including
                             power sources such as rechargeable
                             and compact batteries, ready-to-go
                             vape pens, and cartridges/vape

                            (3) Other revenue adjustments
                             represent the Company's
                             determination of returns and pricing
                             adjustments, and relate to the
                             Canadian recreational business-to-
                             business channel.

Canadian Cannabis

    --  Recreational B2B net sales increased by 2% from Q2 2020, adjusting for a
        $32.7 million charge in Q2 2020 for returns, return provisions and
        pricing allowances primarily related to restructuring the Company's
        softgel & oil portfolio.  Recreational B2B net sales increased by 21%
        compared to Q1 2021 driven by store openings across Canada and improved
        market share performance.
    --  Recreational B2C net sales increased 43% over the comparative period due
        primarily to an increase in number of corporate stores and cannabis 1.0
        products (dried flower, oils and soft gels) and cannabis 2.0 products
        driving increased foot traffic. Recreational B2C net sales essentially
        doubled versus Q1 2021 as store operations returned to pre-COVID level
        and we opened up additional stores in Alberta.
    --  Canadian medical net revenue increased 7% from Q2 2020 driven primarily
        by higher average basket size we saw in Q2 2021.

International Cannabis

    --  C3 revenue in Q2 2021 decreased 3% over Q2 2020 due to a packaging
        supply issue with one of the distributors, which has since been
    --  Dried flower sales in Germany decreased 5% in Q2 2021 over Q2 2020
        driven by slower market growth and intensifying competition in flower
        and extract segments.

Strategic Businesses

    --  S&B vaporizer revenue in Q2 2021 increased 100% over Q2 2020, benefiting
        from expanded distribution in the U.S., a broader product portfolio and
        increased customer demand. S&B is achieving record monthly sales as the
        business continues to benefit from new US distributors added earlier
        this year as well as reorders.
    --  This Works sales in Q2 2021 increased 34% over Q2 2020 due to
        strengthened ecommerce sales channel, sell-ins to the UK
        brick-and-mortar stores ahead of the holiday season and launch of new
        Stress Check hand sanitizer in the U.S.
    --  BioSteel sales benefited from reopening of big box retailers after the
        pandemic, expanded retail distribution in Canada and the launch of
        ready-to-drink sports drinks in the U.S. Over half of BioSteel's sales
        during the period came from the U.S. market.

The second quarter fiscal 2021 and second quarter fiscal 2020 financial results presented in this press release have been prepared in accordance with U.S. GAAP.

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Mike Lee, CFO at 10:00 AM Eastern Time on November 9, 2020.

Webcast Information

A live audio webcast will be available at:

Replay Information

A replay will be accessible by webcast until 11:59 PM ET on February 7, 2021 at:

Non-GAAP Measures

Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net (loss) income, adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; expected credit losses on financial assets and related charges; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company's Quarterly Report on Form 10-Q to be filed with the SEC.

Free Cash Flow is a non- GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Company's Quarterly Report on Form 10-Q to be filed with the SEC.

About Canopy Growth Corporation

Canopy Growth (TSX:WEED, NYSE:CGC) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through the Company's subsidiary, Storz & Bickel GMbH & Co. KG. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time. The Company has operations in over a dozen countries across five continents.

The Company's medical division, Spectrum Therapeutics is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public's understanding of cannabis, and has devoted millions of dollars toward cutting edge, commercializable research and IP development. Spectrum Therapeutics sells a range of full-spectrum products using its colour-coded classification Spectrum system as well as single cannabinoid Dronabinol under the brand Bionorica Ethics.

The Company operates retail stores across Canada under its award-winning Tweed and Tokyo Smoke banners. Tweed is a globally recognized cannabis brand which has built a large and loyal following by focusing on quality products and meaningful customer relationships.

From our public listing on the Toronto Stock Exchange and New York Stock Exchange to our continued international expansion, pride in advancing shareholder value through leadership is engrained in all we do at Canopy Growth. Canopy Growth has established partnerships with leading sector names including cannabis icons Snoop Dogg and Seth Rogen, breeding legends DNA Genetics and Green House Seeds, and Fortune 500 alcohol leader Constellation Brands, to name but a few. For more information visit

Notice Regarding Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect," "project," "projections," "forecasts," "plans," "seeks," "anticipates," "potential," "proposed," "will," "should," "could," "would," "may," "likely," "designed to," "foreseeable future," "believe," "scheduled" and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Forward-looking statements include, but are not limited to, statements with respect to:

    --  the uncertainties associated with the COVID-19 pandemic, including our
        ability to continue operations, the ability of our suppliers and
        distribution channels to continue to operate, and the use of our
        products by consumers, and disruptions to the global and local economies
        due to related stay-at-home orders, quarantine policies and restrictions
        on travel, trade and business operations and a reduction in
        discretionary consumer spending;
    --  laws and regulations and any amendments thereto applicable to our
        business and the impact thereof, including uncertainty regarding the
        application of U.S. state and federal law to U.S. hemp (including CBD)
        products and the scope of any regulations by the U.S. Federal Drug
        Administration, the U.S. Federal Trade Commission, the U.S. Patent and
        Trademark Office, the U.S. Department of Agriculture (the "USDA") and
        any state equivalent regulatory agencies over U.S. hemp (including CBD)
    --  expectations regarding the regulation of the U.S. hemp industry in the
        U.S., including the promulgation of regulations for the U.S. hemp
        industry by the USDA;
    --  expectations regarding the potential success of, and the costs and
        benefits associated with, our acquisitions, joint ventures, strategic
        alliances and equity investments;
    --  the amended plan of arrangement with Acreage Holdings, Inc, including
        the consummation of such acquisition;
    --  the grant, renewal and impact of any license or supplemental license to
        conduct activities with cannabis or any amendments thereof;
    --  our international activities and joint venture interests, including
        required regulatory approvals and licensing, anticipated costs and
        timing, and expected impact;
    --  the ability to successfully create and launch brands and further create,
        launch and scale cannabis-based products and U.S. hemp-derived consumer
        products in jurisdictions where such products are legal and that we
        currently operate in;
    --  the benefits, viability, safety, efficacy, dosing and social acceptance
        of cannabis, including CBD and other cannabinoids;
    --  the anticipated benefits and impact of the investments in us (the "CBI
        Group Investments") by Constellation Brands, Inc. and its affiliates
        (together, the "CBI Group");
    --  the potential exercise of the warrants held by the CBI Group,
        pre-emptive rights and/or top-up rights in connection with the CBI Group
        Investments, including proceeds to us that may result therefrom or the
        potential conversion of notes held by the CBI Group in connection with
        the CBI Group Investments;
    --  expectations regarding the use of proceeds of equity financings,
        including the proceeds from the CBI Group Investments;
    --  the legalization of the use of cannabis for medical or recreational in
        jurisdictions outside of Canada, the related timing and impact thereof
        and our intentions to participate in such markets, if and when such use
        is legalized;
    --  our ability to execute on our strategy and the anticipated benefits of
        such strategy;
    --  the ongoing impact of the legalization of additional cannabis product
        types and forms for recreational use in Canada, including federal,
        provincial, territorial and municipal regulations pertaining thereto,
        the related timing and impact thereof and our intentions to participate
        in such markets;
    --  the ongoing impact of developing provincial, territorial and municipal
        regulations pertaining to the sale and distribution of cannabis, the
        related timing and impact thereof, as well as the restrictions on
        federally regulated cannabis producers participating in certain retail
        markets and our intentions to participate in such markets to the extent
    --  the future performance of our business and operations;
    --  our competitive advantages and business strategies;
    --  the competitive conditions of the industry;
    --  the expected growth in the number of customers using our products;
    --  our ability or plans to identify, develop, commercialize or expand our
        technology and research and development initiatives in cannabinoids, or
        the success thereof;
    --  expectations regarding revenues, expenses and anticipated cash needs;
    --  expectations regarding cash flow, liquidity and sources of funding;
    --  expectations regarding capital expenditures;
    --  the expansion of our production and manufacturing, the costs and timing
        associated therewith and the receipt of applicable production and sale
    --  the expected growth in our growing, production and supply chain
    --  expectations regarding the resolution of litigation and other legal
    --  expectations with respect to future production costs;
    --  expectations with respect to future sales and distribution channels;
    --  the expected methods to be used to distribute and sell our products;
    --  our future product offerings;
    --  the anticipated future gross margins of our operations;
    --  accounting standards and estimates;
    --  expectations regarding our distribution network; and
    --  expectations regarding the costs and benefits associated with our
        contracts and agreements with third parties, including under our
        third-party supply and manufacturing agreements.

Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.

The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management's perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; (x) our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; (xiii) our ability to continue to operate in light of the COVID-19 pandemic and the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this press release and other reports we file with, or furnish to, the Securities and Exchange Commission (the "SEC") and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, the risk that the COVID-19 pandemic may disrupt our operations and those of our suppliers and distribution channels and negatively impact the use of our products; consumer demand for cannabis and U.S. hemp products; that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; future levels of revenues; our ability to manage disruptions in credit markets or changes to our credit rating; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; the success or timing of completion of ongoing or anticipated capital or maintenance projects; business strategies, growth opportunities and expected investment; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; changes in regulatory requirements in relation to our business and products; and the factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended March 31, 2020 filed with the SEC on June 1, 2020. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.



              (in thousands of Canadian dollars, except number of shares and per share data, unaudited)

                September 30,                            March 31,

                                                                                      2020                                  2020


     Current assets:

     Cash and cash equivalents                                                   $673,287                            $1,303,176

     Short-term investments                                                     1,048,921                               673,323

      Restricted short-term investments                                             14,332                                21,539

     Amounts receivable, net                                                       79,668                                90,155

     Inventory                                                                    398,454                               391,086

      Prepaid expenses and other assets                                             77,227                                85,094

     Total current assets                                                       2,291,889                             2,564,373

     Equity method investments                                                     25,663                                65,843

     Other financial assets                                                       381,878                               249,253

      Property, plant and equipment                                              1,495,143                             1,524,803

     Intangible assets                                                            437,344                               476,366

     Goodwill                                                                   1,933,476                             1,954,471

     Other assets                                                                   8,337                                22,636

     Total assets                                                              $6,573,730                            $6,857,745


     Current liabilities:

     Accounts payable                                                             $81,064                              $123,393

      Other accrued expenses and liabilities                                        83,064                                64,994

      Current portion of long-term debt                                             13,272                                16,393

     Other liabilities                                                            147,060                               215,809

     Total current liabilities                                                    324,460                               420,589

     Long-term debt                                                               520,424                               449,022

      Deferred income tax liabilities                                               39,569                                47,113

      Liability arising from Acreage
       Arrangement                                                                 147,000                               250,000

     Warrant derivative liability                                                 221,948                               322,491

     Other liabilities                                                            167,267                               190,660

     Total liabilities                                                          1,420,668                             1,679,875

      Commitments and contingencies

      Redeemable noncontrolling interest                                            83,900                                69,750

      Canopy Growth Corporation shareholders'

      Common shares -$nil par value;
       Authorized -unlimited number of
       shares;                                                                   6,745,255                             6,373,544
      Issued -372,046,111 shares and
       350,112,927 shares, respectively

     Additional paid-in capital                                                 2,533,112                             2,615,155

      Accumulated other comprehensive income                                       103,306                               220,899

     Deficit                                                                  (4,463,798)                          (4,323,236)

      Total Canopy Growth Corporation
       shareholders' equity                                                      4,917,875                             4,886,362

     Noncontrolling interests                                                     151,287                               221,758

     Total shareholders' equity                                                 5,069,162                             5,108,120

      Total liabilities and shareholders'
       equity                                                                   $6,573,730                            $6,857,745



     (in thousands of Canadian dollars, except number of shares and per share data, unaudited)

                                                                                                               Three months ended                                       Six months ended
                                                                                                      September 30,                                           September 30,

                                                                                                                             2020                                                    2019        2020         2019

       Revenue                                                                                                          $150,828                                                 $85,621    $269,916     $189,012

       Excise taxes                                                                                                       15,562                                                   9,008      24,234       21,917

       Net revenue                                                                                                       135,266                                                  76,613     245,682      167,095

       Cost of goods sold                                                                                                109,186                                                  72,970     213,107      145,162

       Gross margin                                                                                                       26,080                                                   3,643      32,575       21,933

       Operating expenses:

       Selling, general and administrative expenses                                                                      147,253                                                 181,601     282,645      327,248

       Share-based compensation                                                                                           21,984                                                  92,881      52,669      180,243

       Expected credit losses on financial assets and 
       related charges                                                 94,745                                                             94,745

       Asset impairment and restructuring costs                                                                           46,363                                                             59,157

       Total operating expenses                                                                                          310,345                                                 274,482     489,216      507,491

       Operating loss                                                                                                  (284,265)                                              (270,839)  (456,641)   (485,558)

       Loss from equity method investments                                                                              (32,991)                                                (2,171)   (40,180)     (4,004)

       Other income (expense), net                                                                                       221,256                                                 509,893     269,461      542,661

       (Loss) income before income taxes                                                                                (96,000)                                                236,883   (227,360)      53,099

       Income tax (expense) recovery                                                                                       (552)                                                  5,767       2,486      (4,500)

       Net (loss) income                                                                                                (96,552)                                                242,650   (224,874)      48,599

       Net loss attributable to noncontrolling interests                                                                (64,491)                                               (16,268)   (84,312)    (24,450)
        and redeemable noncontrolling interest

       Net (loss) income attributable to Canopy                                                                        $(32,061)                                               $258,918  $(140,562)     $73,049

          Growth Corporation

       Basic (loss) earnings per share                                                                                   $(0.09)                                                  $0.75     $(0.38)       $0.21

       Basic weighted average common shares outstanding                                                              371,520,534                                             347,226,921 367,663,135  346,028,903

       Diluted (loss) earnings per share                                                                                 $(0.09)                                                  $0.25     $(0.38)       $0.19

       Diluted weighted average common shares outstanding                                                            371,520,534                                             380,323,118 367,663,135  382,765,533



              (in thousands of Canadian dollars, unaudited)

                                                                                                  Six months ended September 30,

                                                                                                                            2020         2019

                   Cash flows from operating activities:

     Net loss                                                                                                        $(224,874)     $48,599

      Adjustments to reconcile net loss to net cash used
       in operating activities:

      Depreciation of property, plant and equipment                                                                       36,373       29,813

     Amortization of intangible assets                                                                                   29,432       15,955

      Share of loss on equity method investments                                                                          40,180        4,004

     Share-based compensation                                                                                            52,669      180,243

     Asset impairment and restructuring costs                                                                            59,157

      Expected credit losses on financial assets and
       related charges                                                                                                    94,745

     Income tax (recovery) expense                                                                                      (2,486)       4,500

     Non-cash foreign currency                                                                                         (17,756)     (1,463)

     Interest paid                                                                                                     (12,837)    (12,750)

      Change in operating assets and liabilities, net of
       effects from purchases 
              of businesses:

     Amounts receivable                                                                                                   1,498       11,390

     Prepaid expenses and other assets                                                                                  (6,604)    (50,224)

     Inventory                                                                                                         (23,500)   (143,229)

     Accounts payable and accrued liabilities                                                                          (11,408)      10,584

      Other, including non-cash fair value adjustments                                                                 (294,884)   (469,507)

     Net cash used in operating activities                                                                            (280,295)   (372,085)

                   Cash flows from investing activities:

      Purchases of and deposits on property, plant and
       equipment                                                                                                        (90,195)   (440,150)

     Purchases of intangible assets                                                                                     (7,604)     (9,538)

     Proceeds on sale of intangible assets                                                                               18,337

      (Purchases) redemption of short-term investments                                                                 (367,779)     388,027

     Investments in equity method investments                                                                                       (4,719)

     Investments in other financial assets                                                                              (7,526)    (36,423)

     Investment in Acreage Arrangement                                                                                 (49,849)   (395,190)

     Loan advanced to Acreage Hempco                                                                                   (66,995)

      Recovery of amounts related to construction
       financing                                                                                                          10,000

      Payment of acquisition related liabilities                                                                         (6,394)    (21,447)

      Net cash outflow on acquisition of noncontrolling
       interests                                                                                                           (125)

      Net cash outflow on acquisition of subsidiaries                                                                              (416,028)

     Net cash used in investing activities                                                                            (568,130)   (935,468)

                   Cash flows from financing activities:

     Payment of share issue costs                                                                                         (677)       (129)

      Proceeds from issuance of shares by Canopy Rivers                                                                       92          156

     Proceeds from exercise of stock options                                                                             10,756       36,023

     Proceeds from exercise of warrants                                                                                 244,990          446

     Issuance of long-term debt                                                                                           1,564        5,278

     Repayment of long-term debt                                                                                        (5,920)   (104,282)

      Net cash provided by (used in) financing activities                                                                250,805     (62,508)

      Effect of exchange rate changes on cash and cash
       equivalents                                                                                                      (32,269)     (8,305)

     Net decrease in cash and cash equivalents                                                                        (629,889) (1,378,366)

      Cash and cash equivalents, beginning of period                                                                   1,303,176    2,480,830

     Cash and cash equivalents, end of period                                                                          $673,287   $1,102,464

                   Adjusted EBITDA
                 Reconciliation (Non-GAAP

                                                                                           Three months ended September 30,

                   (in thousands of Canadian dollars, unaudited)                                                            2020         2019

     Net (loss) income                                                                                                $(96,552)    $242,650

     Income tax expense (recovery)                                                                                          552      (5,767)

     Other (income) expense, net                                                                                      (221,256)   (509,893)

     Loss on equity method investments                                                                                   32,991        2,171

     Share-based compensation(2)                                                                                         21,984       92,881

     Acquisition-related costs                                                                                            3,472        2,562

     Depreciation and amortization(2)                                                                                    31,758       25,016

     Asset impairment and restructuring costs                                                                            46,363

      Expected credit losses on financial assets
        and related charges                                                                                               94,745

      Charges related to the flow-through of inventory
               step-up on business combinations                                                                              281

     Adjusted EBITDA(1)                                                                                               $(85,662)  $(150,380)

                (1)Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Measures".

                   2 From Condensed Interim Consolidated Statements of
                    Cash Flows.

                   Free Cash Flow Reconciliation

                                                                                           Three months ended September 30,

                   (in thousands of Canadian dollars, unaudited)                                                            2020         2019

     Net cash used in operating activities                                                                           $(161,749)  $(213,795)

      Purchases of and deposits on property, plant and
       equipment                                                                                                        (28,648)   (228,326)

     Free cash flow(1)                                                                                               $(190,397)  $(442,121)

                (1)Free cash flow is a non-GAAP measure. See "Non-GAAP Measures".

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