Canopy Growth Reports Second Quarter Fiscal Year 2024 Financial Results Strong execution drove significant improvement in gross margins and reduced cash burn in Q2 FY2024 Management reaffirms expectation to achieve posit

Canopy Growth Reports Second Quarter Fiscal Year 2024 Financial Results

Strong execution drove significant improvement in gross margins and reduced cash burn in Q2 FY2024

Management reaffirms expectation to achieve positive Adjusted EBITDA in all business units exiting FY2024

Solidified foundation expected to deliver profitable growth and achieve sustainable cannabis market leadership

SMITHS FALLS, ON, November 9, 2023 /PRNewswire/ - Canopy Growth Corporation ( Canopy Growth or the Company ) (TSX:WEED) (Nasdaq: CGC) today announces its financial results for the second quarter ended September 30, 2023. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.

-Canadian cannabis business delivered its third consecutive quarter of organic revenue growth while significantly reducing costs.

-Achieved Q2 FY2024 net revenue of $70 MM. Consolidated gross margin was 34% in Q2 FY2024, compared to (1%) in Q2 FY2023, primarily driven by the business transformation initiatives executed since the beginning of FY2023.

-Delivered additional cost reduction of $54 MM in Q2 FY2024, bringing the total cost reduction to $226 MM since the beginning of FY2023. Management is tightening its previously announced cost reduction target to $270 MM $300 MM by the end of FY2024.

-With the completed sale of the Company's Hershey Drive facility, generated aggregate gross proceeds of approximately $155 MM from facilities sales since April 1, 2023.

-Reduced overall debt by $364 MM to $681 MM in Q2 FY2024; total debt reduction of approximately $1 BN delivered since the beginning of FY2023.

Canopy Growth has successfully transformed into an asset-light, cannabis-focused company with a stronger balance sheet. These actions have resulted in a Company that looks and operates fundamentally different than before, a Canopy Growth that is purpose-built for the markets and geographies of greatest opportunity.

David Klein, Chief Executive Officer

Our financial results demonstrated marked improvement this quarter, including significant gross margin gains and reduced cash burn. This enhanced performance, together with a series of completed balance sheet strengthening actions, has solidified our foundation and set the stage for profitable growth ahead.

Judy Hong, Chief Financial Officer

Second Quarter Fiscal 2024 Financial Summary

1 Adjusted gross margin is a non-GAAP measure, and for Q2 FY2024 excludes $(0.7) MM of restructuring cost reversals recorded in cost of goods sold (Q2 FY2023 - excludes $4.8 MM 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.

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

3 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.

4 Unless otherwise indicated, market share data disclosed in this press release is calculated using the Company's internal proprietary market share tool that utilizes point of sales data supplied by third-party data providers and government agencies.

On November 3, 2023, we received a letter from the staff of the SEC (the Staff ) in which the Staff indicated that, despite the Reorganization Amendments, it would object to the deconsolidation of Canopy USA once Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage. We are currently assessing additional structural amendments to Canopy USA that would facilitate the deconsolidation of Canopy USA from the financial results of Canopy Growth, and intend to maintain active discussions with the Staff on such changes.

5 Until such time as Canopy USA (as defined herein) elects to exercise its rights to acquire Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, Wana ), Canopy USA will have no direct or indirect economic or voting interests in Wana, Canopy USA will not directly or indirectly control Wana, and Canopy USA, on the one hand, and Wana, on the other hand, will continue to operate independently of one another. The Company holds non-voting and non-participating shares in Canopy USA that are exchangeable into common shares of Canopy USA.

6 Until such time as Canopy USA elects to exercise its rights to acquire Lemurian, Inc. ( Jetty ), Canopy USA will have no direct or indirect economic or voting interests in Jetty, Canopy USA will not directly or indirectly control Jetty, and Canopy USA, on the one hand, and Jetty, on the other hand, will continue to operate independently of one another. The Company holds non-voting and non-participating shares in Canopy USA that are exchangeable into common shares of Canopy USA.

7 Based on October 2023 BDSA data for dollars sold for all product categories.

8 Until such time as the rights to acquire Acreage Holdings, Inc. ( Acreage ) are exercised, neither the Company nor Canopy USA will have any direct or indirect economic or voting interests in Acreage, neither the Company nor Canopy USA will directly or indirectly control Acreage, and each of the Company, Canopy USA and Acreage will continue to operate independently of one another. The Company holds non-voting and non-participating shares in Canopy USA that are exchangeable into common shares of Canopy USA.

Second Quarter Fiscal 2024 Revenue Review9

The Q2 FY2024 and Q2 FY2023 financial results presented in this press release have been prepared in accordance with U.S. GAAP.

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Judy Hong, CFO at 5:30 PM Eastern Time on November 9, 2023.

A live audio webcast will be available at https://app.webinar.net/8jnJ0EJDRBz

A replay will be accessible by webcast until 11:59 PM Eastern Time on February 7, 2024 at https://app.webinar.net/8jnJ0EJDRBz

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 September 30, 2023 (the Form 10-Q ) to be filed with the Securities and Exchange Commission (the 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 to be 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 to be filed with the SEC.

9 In Q2 FY2024, we are reporting our financial results for the following four reportable segments: (i) Canada cannabis; (ii) rest-of-world cannabis; (iii) Storz & Bickel; and (iv)

This Works. Information regarding segment net revenue and segment gross margin for the comparative periods has been restated to reflect the

aforementioned change in reportable segments.

10 For Q2 FY2024, amount is net of excise taxes of $10.8 MM and other revenue adjustments of $0.5 MM (Q2 FY2023 - $11.4 MM and $0.4 MM, respectively).

11 For Q2 FY2024, amount is net of excise taxes of $1.7 MM (Q2 FY2023 - $1.1 MM).

12 For Q2 FY2024, amount reflects other revenue adjustments of $0.1 MM (Q2 FY2023 - $0.5 MM).

Director, Investor Relations

Canopy Growth is a leading North American cannabis and consumer packaged goods ( CPG ) 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. Canopy Growth's CPG portfolio features targeted 24-hour skincare and wellness solutions from This Works, gourmet wellness products by Martha Stewart CBD, and 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 its rights to Acreage, a vertically integrated multi-state cannabis operator with principal operations in densely populated states across the Northeast, as well as Wana Brands, a leading cannabis edible brand in North America, and Jetty Extracts, a California-based producer of high quality cannabis extracts and pioneer of clean vape technology.

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.

References to information included on, or accessible through, website do not constitute incorporation by reference of the information contained at or available through such websites, and you should not consider such information to be part of this press release.

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:

-the Company's ability to transform to an asset light model and to further reduce costs and to deliver further SG&A and COGS reduction of $270 MM to $300 MM in the aggregate;

-the Company's ability to achieve profitable growth in its core businesses and position itself for North American cannabis leadership;

-the Company's ability to achieve positive Adjusted EBITDA across its business units exiting FY2024 and further enhance its financial position;

-expectations regarding the development and outcome of proceedings commenced by BioSteel Sports Nutrition Inc. under the CCAA in the Ontario Superior Court of Justice and the recognition of that proceeding under Chapter 15 of the United States Bankruptcy Code;

-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 U.S. 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 (the USDA ) and any state equivalent regulatory agencies over U.S. 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 Company's ability to execute on its strategy to accelerate the Company's entry into the U.S. cannabis market through the creation of Canopy USA (the Reorganization );

-expectations regarding the potential success of, and the costs and benefits associated, with the Reorganization;

-expectations regarding the Company's ability deconsolidate the financial results of Canopy USA from the financial results of Canopy Growth upon Canopy USA's acquisition of Wana, Jetty and the Fixed Shares of Acreage;

-expectations regarding the potential success of, and the costs and benefits associated with, the comprehensive steps and actions being undertaken by the Company with respect to its Canadian operations (the Canadian Transformation Plan ) including any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, operating expenses, employee turnover and other changes with respect thereto;

-expectations related to our announcement of certain restructuring actions, the Reorganization, the Canadian Transformation Plan and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;

-expectations 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 arrangement agreement we entered into with Acreage and Canopy USA on October 24, 2022, as amended (the Floating Share Arrangement Agreement) , the anticipated benefits of such arrangement, the anticipated timing of the acquisition of Acreage's Class E subordinate voting shares (the Fixed Shares ) and Class D subordinated voting shares by Canopy USA, the satisfaction or waiver of the closing conditions set out in the Floating Share Arrangement Agreement and the arrangement agreement we previously entered into with Acreage on April 18, 2019, as amended, including receipt of all regulatory approvals, and the anticipated timing and occurrence of the Company's exercise of the option to acquire the Fixed Shares and closing of such transaction;

-expectations regarding the Company's contemplated asset sales and the direction of certain proceeds from such asset sales;

-expectations regarding the laws and regulations and any amendments thereto relating to the U.S. hemp industry in the U.S., including the promulgation of regulations for the U.S. hemp industry by the USDA and relevant state regulatory authorities;

-expectations regarding the potential success of, and the costs and benefits associated with, our acquisitions, joint ventures, 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 and joint venture interests, 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 U.S. 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 remediation plan and our ability to remediate the material weaknesses in our internal control over financial reporting;

-our ability to continue as a going concern;

-the anticipated benefits and impact of the investments in us (the CBI Group Investments ) from Constellation Brands, Inc. and its affiliates (collectively, the CBI Group );

-the potential exercise of the warrants held by the CBI Group, pre-emptive rights and/or top-up rights held by the CBI Group;

-expectations regarding the use of proceeds of equity financings, including the proceeds from the CBI Group Investments;

-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, 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 ( THC );

-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;