Shares of Canopy Growth Corp. were trading down close to nine per cent after global alcohol giant Constellation Brands Inc. said it did not plan to make any more cash contributions to the cannabis firm.
Constellation Brands made the comment in a U.S. regulatory filing where it says it expects to record a comparable nine month net loss of US$125.4 million in its Canopy investment.
U.S.-based Constellation Brands says it still holds warrants to buy Canopy Growth shares, including some priced at less than half Canopy’s current share price, but that it will evaluate use of the blocks of warrants prior to their expiration in May next year and in November 2023.
Constellation says that beyond the warrants, it does not plan any further cash contributions to the company as it says Canopy is adequately capitalized with more than $2.7 billion in cash and marketable securities as of Sept. 30.
The company behind brands like Corona beer announced a deal in August of last year to invest $5 billion in Canopy Growth to secure a 38 per cent ownership of the company.
Since legalization, Canadian cannabis companies have struggled on profitability and many have missed expectations, driving share prices down. Canopy’s shares, which hit a high of $70.98 in April, were trading down $2.36 or 8.7 per cent at $24.67 in late afternoon trading on the Toronto Stock Exchange.
Comments