Canopy Shareholders Face Significant Dilution Threat From Maturing Debt and Continued Losses

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 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.