Canopy Growth Reports First Quarter Fiscal Year 2025 Financial Results Focus on profitable revenue generation delivered 67% increase in gross profit year-over-year Record quarter for Canada Medical Cannabis with Net Reve

Canopy Growth Reports First Quarter Fiscal Year 2025 Financial Results

Focus on profitable revenue generation delivered 67% increase in gross profit year-over-year

Record quarter for Canada Medical Cannabis with Net Revenue increasing 20% year-over-year and 6th consecutive quarter of growth

Extended maturity of senior secured term loan to December 18, 2026 with an option to further extend to September 18, 2027

SMITHS FALLS, ON, August 9, 2024 /PRNewswire/ - Canopy Growth Corporation ( Canopy Growth or the Company ) (TSX:WEED) (Nasdaq: CGC) today announces its financial results for the first quarter ended June 30, 2024 ( Q1 FY2025 ). All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

-Achieved Gross profit of $23MM in Q1 FY2025 representing a 67% increase over the first quarter ended June 30, 2023 ( Q1 FY2024 ), despite a decline in consolidated net revenue.

-Delivered consolidated gross margin of 35%, and Canada cannabis segment gross margin of 32% during Q1 FY2025.

-Operating loss from continuing operations was $29MM in Q1 FY2025, a 47% improvement over Q1 FY2024.

-Consolidated Adjusted EBITDA1 loss narrowed to $5MM in Q1 FY2025, a 77% improvement over Q1 FY2024 driven primarily by cost reduction actions already implemented.

-Storz & Bickel net revenue increased 2% in Q1 FY2025 over Q1 FY2024, led by over 100% growth in Storz & Bickel sales in Germany2, which offset a sales decline in the non-medical vaporizer channel in Australia following a regulatory change.

-Demonstrated broad-based improvement across key financial metrics in Q1 FY2025 including a 31% reduction in Cost-of-Goods Sold ( COGS ) and a 24% reduction in Selling, General & Administrative ( SG&A ) expenses, in each case, over Q1 FY2024.

-Cash and short-term investments balance of $195MM at June 30, 2024 as compared to $203MM at March 31, 2024.

The fundamentals of our business continue to strengthen, and our focus on profitable revenue generation is yielding clear results as we set the stage for growth in the second half of fiscal 2025. With our core businesses delivering adjusted EBITDA profitability and primed for growth, paired with Canopy USA's positioning to benefit from near-term market opportunities in the U.S., Canopy Growth is advancing rapidly and is well established for multi-market cannabis leadership.

David Klein, Chief Executive Officer

Our strategic initiatives have led to notable improvements in Gross Margins and Adjusted EBITDA as well as reduction in SG&A expenses. We are pleased that all of our business units delivered positive Adjusted EBITDA during Q1 Fiscal 2025 and expect to achieve positive Adjusted EBITDA on a consolidated basis in the second half of the fiscal year. We've continued to enhance our financial flexibility through additional actions, including the extension of our term loan, which will enable us to fund strategic growth initiatives.

Judy Hong, Chief Financial Officer

First Quarter Fiscal 2025 Financial Summary

1.Adjusted EBITDA is a non-GAAP measure. See Non-GAAP Measures and Schedule 5 for a reconciliation of net loss to Adjusted EBITDA.

2 Based on internal estimates including sales in both B2B and B2C channels; in local currency

3 Adjusted gross margin is a non-GAAP measure, and for Q1 FY2025 excludes $nil of restructuring cost recorded in cost of goods sold (Q1 FY2024 - excludes $nil of restructuring costs recorded in cost of goods sold). See Non-GAAP Measures and Schedule 4 for a reconciliation of net revenue to adjusted gross margin.

4 Adjusted EBITDA is a non-GAAP measure. See Non-GAAP Measures and Schedule 5 for a reconciliation of net loss to Adjusted EBITDA.

5 Free cash flow is a non-GAAP measure. See Non-GAAP Measures and Schedule 6 for a reconciliation of net cash used in operating activities to free cash flow.

6 Source: Insight Health Greenline ODV National Database, July 2024

7 Based on BDSA June 2024 data for dollars sold for all product categories

First Quarter Fiscal 2025 Revenue Review8

The Q1 FY2025 and Q1 FY2024 financial results presented in this press release have been prepared in accordance with U.S. GAAP.

8 In Q1 FY2025, we are reporting our financial results for the following four reportable segments: (i) Canada cannabis; (ii) international markets cannabis; (iii) Storz & Bickel; and (iv) This Works. On December 18, 2023, the Company completed the sale of This Works and as of such date, the results of This Works are no longer included in the Company's financial results. Information regarding segment net revenue and segment gross margin for the comparative periods has been restated to reflect the aforementioned change in reportable segments.

9 For Q1 FY2025, amount is net of excise taxes of $7.5 MM and other revenue adjustments of $1.2 MM (Q1 FY2024 - $11.0 MM and $0.9 MM, respectively).

10 For Q1 FY2025, amount is net of excise taxes of $2.1 MM (Q1 FY2024 - $1.4 MM).

11 For Q1 FY2025, amount reflects other revenue adjustments of $nil (Q1 FY2024 - $0.1 MM).

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, CFO at 10:00 AM Eastern Time on August 9, 2024.

A live audio webcast will be available at: https://app.webinar.net/Lm5q6QW1Apv

A replay will be accessible by webcast until 11:59 PM ET on November 7, 2024 at: https://app.webinar.net/Lm5q6QW1Apv

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 income (loss), 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; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition, divestiture, and other costs. Asset impairments related to periodic changes to the Company's supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024 (the Form 10-Q ) filed with the Securities and Exchange Commission ( 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 Form 10-Q filed with the SEC.

Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted gross margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted gross margin percentage is calculated as adjusted gross margin divided by net revenue. The adjusted gross margin and adjusted gross margin percentage reconciliation is presented within this news release and explained in the Form 10-Q filed with the SEC.

Director, Investor Relations

Canopy Growth is a world leading cannabis company dedicated to unleashing the power of cannabis to improve lives.

Through an unwavering commitment to our consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space, in addition to category defining vaporizer technology made in Germany by Storz & Bickel.

Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC market through an unconsolidated, non-controlling interest in Canopy USA, which owns and operates Jetty Extracts, a California-based producer of high- quality cannabis extracts and pioneer of clean vape technology, in addition to holding rights for Wana Brands, a leading North American edibles brand,

as well as Acreage Holdings, a vertically integrated multi-state cannabis operator with principal operations in densely populated states across the Northeast and Midwest.

Beyond its world-class products, Canopy Growth is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment pioneering a future where cannabis is understood and welcomed for its potential to help achieve greater well-being and life enhancement.

For more information visit www.canopygrowth.com.

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. To the extent any forward-looking statements in this news release constitutes financial outlooks within the meaning of applicable Canadian securities laws, the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. 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:

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 hemp (including cannabidiol ( CBD )) products and the scope of any regulations by the U.S. Food and Drug Administration, the U.S. Drug Enforcement Administration, the U.S. Federal Trade Commission, the U.S. Patent and Trademark Office, the U.S. Department of Agriculture and any state equivalent regulatory agencies over hemp (including CBD) products;

expectations regarding the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;

our ability to refinance debt as and when required on terms favorable to us and comply with covenants contained in our debt facilities and debt instruments;

the impacts of the Company's strategy to accelerate entry into the U.S. cannabis market through the creation of Canopy USA, including the costs and benefits associated with the amendments made to the Canopy USA structure to facilitate the deconsolidation of the financial results of Canopy USA within the Company's financial statements;

expectations for Canopy USA to capitalize on the opportunity for growth in the United States cannabis sector and the anticipated benefits of such strategy;

the timing and outcome of the floating share arrangement, whereby, subject to the terms and conditions of a Floating Share Arrangement Agreement (the Floating Share Arrangement Agreement ), Canopy USA is expected to acquire all of the issued and outstanding Class D subordinate voting shares (the Floating Shares ) of Acreage by way of a court-approved plan on arrangement under the Business Corporations Act (British Columbia) (the Floating Share Arrangement ) in exchange for 0.045 of a Company common share for each Floating Share held, the anticipated benefits of the Floating Share Arrangement, the anticipated timing and occurrence of the acquisition of the Class E subordinate voting shares (the Fixed Shares ) of Acreage pursuant to the exercise of the Acreage Option, the anticipated timing and occurrence of the acquisition of the Floating Shares by Canopy USA, the satisfaction or waiver of the closing conditions set out in the Floating Share Arrangement Agreement and the arrangement agreement dated April 18, 2019, as amended on May 15, 2019, September 23, 2020 and November 17, 2020 (the Existing Acreage Arrangement Agreement ), including receipt of all regulatory approvals;

the anticipated timing and occurrence of the acquisition of Mountain High Products, LLC;

the acquisition of additional Class A shares of Canopy USA in connection with the investment in Canopy USA by the Huneeus 2017 Irrevocable Trust (the Trust ) in the aggregate amount of up to US$20 million (the Trust Transaction ), including any warrants of Canopy USA issued to the Trust in accordance with the share purchase agreement entered into by the Trust and Canopy USA;

the anticipated extension to the maturity date of the Term Loan and the timing and occurrence of any prepayments of the Term Loan in connection with the amendment to the credit agreement;

expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, strategic alliances, equity investments and dispositions;

the grant, renewal and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;

our international activities, including required regulatory approvals and licensing, anticipated costs and timing, and expected impact;

our ability to successfully create and launch brands and further create, launch and scale cannabis-based products and 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;

our ability to maintain effective internal control over financial reporting;

our ability to continue as a going concern;

expectations regarding the use of proceeds of equity financings;

the legalization of the use of cannabis for medical or adult-use 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 adult-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, state, 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 permissible;

the timing and nature of legislative changes in the U.S. regarding the regulation of cannabis including tetrahydrocannabinol;

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 licenses;

expectations with respect to our growing, production and supply chain capacities;

expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations;

expectations with respect to future production costs;

expectations with respect to future sales and distribution channels and networks;

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;

expectations regarding the costs and benefits associated with our contracts and agreements with third parties, including under our third-party supply and manufacturing agreements;

our ability to comply with the listing requirements of the Nasdaq Stock Market LLC and the Toronto Stock Exchange; and

expectations on price changes in cannabis markets.

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 , 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, 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; and (xiii) 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. Financial outlooks, as with forward-looking statements generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. Our actual financial position and results of operations may differ materially from management's current expectations.