(Reuters) -Pot producer Canopy Growth Corp reported a smaller quarterly adjusted loss on Friday, as it benefited from cost cuts and a rise in cannabis use during the coronavirus pandemic.
People across North America have turned to marijuana for relaxation and entertainment during the months-long isolation caused by COVID-19, lifting sales of pot producers.
The sector has also attracted renewed investor interest in recent months as U.S. states legalize pot and expectations rise for federal marijuana reform. That has prompted many Canadian cannabis companies to ramp up plans for their U.S. expansions.
“We continue to look at building out our position in the United States. We’re not waiting around on permissibility,” Canopy Chief Executive David Klein said.
The company ended the quarter with C$2.1 billion cash and short-term investments, which is expected to help fuel the expansion, Klein added.
In a bid to turn profitable by this fiscal year, Canopy has also doubled down on its core Canadian market. Earlier in 2021, it bought rival Supreme Cannabis in a deal that made it the owner of four of the top ten cannabis brands in the country.
Klein said Canopy had maintained the top market share in Canada. While the company lost share in the value segment, it is comfortable with prioritizing mainstream and premium products, he said.
The focus on the higher-priced segment and cost cuts helped Canopy’s adjusted gross margin expand by 14% in the quarter ended June 30 to 21%. Its adjusted core loss narrowed to C$63.6 million ($50.85 million), from C$92.2 million a year earlier.
But a 23% rise in revenue fell short of analysts’ estimates as lockdowns in Germany hit its C3 business, which sells synthetic cannabis to pharmacies.
Toronto-listed Canopy shares were down 0.7% at C$23.79.
($1 = 1.2508 Canadian dollars)
(Reporting by Shariq Khan in Bengaluru; Editing by Aditya Soni)
