CGC — FY2026 Financial Report Analysis

Canopy Growth's fiscal 2026 (the year ended March 31, 2026) showed a business that is selling more but still losing money on every level that counts. Net revenue rose 6% to C$284.6 million, driven by Canadian medical and adult-use cannabis. Gross margin, the share of revenue left after the cost of producing what was sold, fell to 24% from 30%. Operating loss widened to C$161.7 million after a C$47.5 million goodwill write-down at the Storz & Bickel vaporizer business. The net loss roughly halved to C$262.9 million, but that comes mostly from smaller write-downs on its US cannabis investments and lower interest costs, not from the operating business. The balance sheet improved sharply, paid for largely by issuing new shares.

All figures are in Canadian dollars. This annual report also restates fiscal 2024 and 2025 because of a warrant accounting error (details below).

At a glance

• Net revenue C$284.6M, +6%: Canadian cannabis did the work: adult-use +20%, medical +18%. Storz & Bickel vaporizers fell 14% and international cannabis fell 7%.
• Adjusted EBITDA -C$20.2M vs -C$23.5M: this is the company's own measure of operating cash profit, before write-downs and one-offs. It is still negative, and improved only C$3.3M. Management's target is to turn it positive during fiscal 2027.
• Net cash C$131.3M vs net debt of C$172.6M a year earlier: the swing came mostly from C$374.2M of new shares sold. The average share count nearly tripled, which is why the loss per share improved far more than the loss itself.

Key figures

Source: Comprehensive Form 10-K for the fiscal year ended March 31, 2026, filed June 15, 2026; Q4 and net-cash figures from the earnings release filed the same day (Form 8-K).

Where the revenue came from

"Net revenue" is after excise taxes, the cannabis duties the company collects for the government. Those rose to C$62.2M from C$45.0M, which is why gross sales grew faster than net revenue.

• Canadian adult-use grew on "infused PRJ offerings and new All-In-One vaporizers," meaning pre-rolled joints with added cannabis extract and disposable vapes. Edibles and plain pre-rolls declined. Growth slowed sharply by the end of the year: Q4 adult-use revenue was up just 1%.
• Canadian medical grew because of "an increase in the average size of medical orders... due largely to an increase in the percentage of insured customers," along with a wider product range. Q4 medical growth was 27%. The March 2026 acquisition of MTL Cannabis added more medical business. The release notes a "recent reduction to the medical cannabis reimbursement offered by Veterans Affairs Canada," which the company is trying to offset with pricing and patient-retention efforts.
• International fell on "supply chain challenges in Europe in the first three quarters," then recovered in Q4 (+68% year over year).
• Storz & Bickel fell on "lapping strong sales in the prior year and continued consumer economic uncertainty." That means it was compared against a strong prior year, while consumers were spending cautiously. The new VEAZY vaporizer, launched September 2025, only partly offset the decline.

Why margins went the wrong way

Gross margin fell 6 points even though revenue grew:

• Cannabis segment gross margin: 22% vs 26%. The 10-K cites "lower sales relating to international markets, higher inventory provisions, costs related to new product launches and a shift in both product and geographical mix." It also includes C$9.9M of inventory write-downs after a post-MTL review of inventory levels, plus C$0.8M of "inventory step-up" flow-through. (Step-up is the accounting uplift on acquired inventory that runs through costs when it is sold.) Excluding those charges, management says Q4 cannabis adjusted gross margin was 26% vs 12% a year earlier. So part of the full-year decline is a one-time clean-up.
• Storz & Bickel gross margin: 33% vs 37%. Lower volume and "increased tariffs on imports to the United States" outweighed the absence of the prior year's clearance discounts.

Below gross margin, overhead fell. Selling, general and administrative costs dropped 6% to C$160.0M on headcount cuts and lower insurance, professional and IT costs. Write-downs more than offset that: impairment and restructuring charges rose to C$67.1M from C$31.2M. Most of it was the C$47.5M write-off of Storz & Bickel goodwill (the premium paid for the business when it was acquired) plus C$8.0M of intangible-asset impairments. That is an admission that the vaporizer business is worth less than Canopy carried it at.

What the headline numbers hide

• The smaller net loss is mostly non-operating. Operating loss widened by C$44.5M. The net loss improved by C$246.0M because "other expense" fell by C$289.4M. Within that, fair-value losses on Canopy USA-related investments fell to C$67.0M from C$400.2M, and interest expense halved to C$38.2M from C$74.6M as debt was paid down. Neither says much about whether selling cannabis is becoming profitable.
• Loss per share improved because of dilution, not just a smaller loss. The net loss fell 48%, but loss per share fell 82%, because the average share count rose from 107.6M to 298.0M. The ATM program, through which the company sells new shares into the market at prevailing prices, raised C$374.2M in the year. On top of that come shares issued for MTL (41.2M), new warrants (rights to buy shares at a fixed price) issued to lenders, and a convertible debenture exchange. Existing shareholders own a much smaller slice of the company than a year ago.
• Restated prior year. Canopy found that certain warrants with US-dollar exercise prices should have been recorded as liabilities and revalued each quarter. Fiscal 2025's loss from continuing operations was restated to C$514.9M from the C$604.1M originally reported, a C$89.2M non-cash fair-value gain. The 10-K reports a material weakness in internal control over financial reporting as of March 31, 2026, and Ontario's securities regulator issued a temporary management cease trade order on the CEO and CFO until the filing was made. The fiscal 2026 warrant gain was only C$8.7M, so the restatement flatters fiscal 2025 more than fiscal 2026.
• Cash burn improved, but is still burn. Operating cash outflow fell to C$63.8M from C$165.8M, helped by lower cash interest and working-capital timing. Free cash flow was -C$69.1M. Year-end cash of C$364.7M came from equity (C$374.2M) and a new US$162.1M face-value secured term loan, which carries SOFR plus 6.25% interest, a 3.25% SOFR floor, a US$90M minimum-cash covenant and warrants at US$1.30. The loan replaced the old credit facility.
• US exposure carries credit risk. Canopy holds about C$175.4M (US$125.8M) of principal owed by Acreage and Wana, entities tied to its Canopy USA investment. The 10-K says Acreage "is currently in default" under its credit agreement and entered a forbearance agreement on May 12, 2026. This year Canopy already wrote down the fair value of its Canopy USA-related loans, this debt included, by C$76.1M.

Takeaway: Revenue growth in Canadian cannabis is real (+15% for the segment), but fiscal 2026 did not show the company becoming profitable. Operating loss widened, gross margin fell, and adjusted EBITDA was still -C$20.2M. The stronger balance sheet was bought with roughly a tripling of the average share count. The test for fiscal 2027 is whether stripping out the one-off inventory and goodwill charges reveals a business that can reach positive adjusted EBITDA, as management targets.

Outlook

Management gave no numeric guidance. The earnings release states the goal of "delivering positive Adjusted EBITDA during fiscal 2027" and expects "net revenue growth across the business" in fiscal 2027. Better cultivation practices (helped by MTL's genetics and growers) are "projected to contribute to meaningful improvements in gross margin," and a full year of fiscal 2026 cost savings is expected to reduce operating expenses. The 10-K also says Canopy expects to begin selling medical cannabis in the United Kingdom during the coming fiscal year.

Our read. Getting from -C$20.2M to positive adjusted EBITDA in one year is plausible only if the Q4 trends hold. Q4's adjusted gross margin was 27% vs 19% and its adjusted EBITDA loss narrowed to -C$6.3M. Positive EBITDA needs gross margin to recover to around 30% on growing revenue while overhead stays flat. There are three headwinds. Adult-use growth stalled in Q4 (+1%). Storz & Bickel is shrinking and paying US tariffs. The Veterans Affairs Canada reimbursement cut hits the medical business, which is the strongest part of the company.

After the year end: on August 7, 2026, Canopy changed auditors, replacing PKF O'Connor Davies with MNP. The 8-K reports no disagreements with the outgoing auditor, but it repeats the material weakness disclosure. Remediation of that weakness is something to track in the next filings.