Canopy Growth (NASDAQ:CGC) reported a 22% increase in fiscal second-quarter revenue as international cannabis sales more than doubled, and executives said the company remains on track to achieve positive adjusted EBITDA in the second half of fiscal 2027.
Revenue rose to CAD 81.4 million for the quarter ended September 30, 2026, while cannabis revenue increased 30% to CAD 66.2 million. The company reported an adjusted EBITDA loss of CAD 2.9 million, an improvement of CAD 0.4 million from the preceding quarter.
Chief Financial Officer Tom Stewart said the company expects a stronger second half partly because of seasonal demand at vaporizer business Storz & Bickel, which has more favorable margins than the cannabis segment. He cautioned that cultivation improvements are unlikely to materially benefit the income statement until Canopy exits fiscal 2027.
International sales lead cannabis growth
International cannabis revenue climbed 141% from a year earlier and 28% sequentially to CAD 12.3 million. Chief Executive Officer Luc Mongeau attributed the increase to better flower availability and a strengthened route to market in Europe.
Stewart said international cannabis typically commands higher average pricing than domestic Canadian sales. Management expects continued international growth and cultivation improvements to support cannabis margin expansion.
Canada medical revenue rose 18% to CAD 25.8 million, helped by rising patient counts and the addition of the MTL medical business. Mongeau said the company is building from a new baseline after a Veterans Affairs Canada reimbursement cap took effect at the beginning of April.
Canada adult-use revenue increased 17% to CAD 21.8 million. Mongeau cited a stronger product portfolio and the addition of MTL brands, which he said performed well in Quebec and were gaining momentum elsewhere in Canada. Canopy has decided to build an internal sales force dedicated to its Canadian brands.
Storz & Bickel revenue declined 4% to CAD 15.1 million. Mongeau cited variability in consumer spending and said the company expects a seasonally strong third quarter driven by the holidays.
Cultivation and European expansion
Canopy is applying techniques from MTL’s master growers at its Kincardine cultivation facility, with a goal of improving flower quality and yields. Mongeau said the company sees potential to increase flower production there by at least 25% to 30% within the existing footprint.
The CEO said Canopy expects noticeable improvements in yield and quality as it exits the third quarter, with the full impact at the beginning of fiscal 2028. During the analyst question-and-answer session, he said 10 of Kincardine’s 24 rooms had been transitioned to new practices and strains, with the transition expected to be complete around the middle of the fourth quarter.
Stewart acknowledged that Canopy is not best in class on cultivation costs and is unlikely to become Canada’s lowest-cost grower. He said the investments are intended to improve competitiveness and provide more high-quality flower for its cannabis businesses.
Mongeau also said the company received EU good manufacturing practice certification at Smiths Falls and renewed certification at Kincardine. He said the Smiths Falls certification creates a path to expand beyond flower in Europe into products such as softgels and oils. He expects the impact of new products to be felt more at the beginning of fiscal 2028.
Margins, cash and profitability
Adjusted gross margin was 31%, down from 33% a year earlier, primarily because of the reduction in the Veterans Affairs Canada reimbursement rate, Stewart said. Storz & Bickel’s gross margin increased to 39% from 38%, despite its revenue decline, which he attributed to cost efficiencies.
Selling, general and administrative expenses rose CAD 3.4 million from a year earlier as Canopy absorbed the MTL business, but fell approximately CAD 0.5 million from the first quarter. Stewart said the company remains on track to reach CAD 10 million in annualized MTL synergies within 18 months of the transaction’s March 2026 closing.
Canopy held CAD 320 million in cash and short-term investments at September 30. Free cash outflow improved by CAD 3.7 million year over year to CAD 15.6 million, even as capital expenditures increased by CAD 1.8 million for cultivation investments.
Shareholders authorized the board to conduct a reverse stock split, but Stewart said the company intends to proceed only if necessary to maintain Nasdaq listing compliance. He also said Canopy had not sold shares through its at-the-market program since December 2025, though it could use the program selectively for strategic opportunities, including acquisitions.
About Canopy Growth (NASDAQ:CGC)
Canopy Growth Corporation is a cannabis company headquartered in Smiths Falls, Ontario, Canada. Founded in 2013, the company operates in the production, distribution and sale of cannabis and cannabis-related products for adult-use and medical markets.
Its product portfolio includes dried cannabis flower, pre-rolls, cannabis oils, softgels, vapes, beverages and edibles. Canopy Growth markets products under several brands, including Tweed, 7ACRES, Doja and Deep Space, with offerings designed for different consumer preferences and product segments.
Canopy Growth primarily serves the Canadian recreational and medical cannabis markets and has pursued international opportunities in selected medical-cannabis markets.
