Canopy's Financial Performance Improving, but Repeated Dilution Continues to Destroy Value

Canopy Growth grows and sells cannabis products primarily in Canada, which accounts for roughly 60% of sales. Unfortunately, the Canadian market is overloaded with too many licensed producers, leading to tough price competition and a stubbornly robust illicit market, so Canopy has yet to reach profitability. We forecast mid-single-digit growth over the next decade for the Canadian market, driven by the conversion of illicit consumers into the legal market. We expect competition to ease as continued industry losses drive consolidation.