Canopy Growth shares still struggling after company makes push for edibles market

Shares of Canadian cannabis company Canopy Growth Corporation are still lagging despite this week’s unveiling of its new products set to hit shelves in December.

On Tuesday, Canopy Growth revealed 13 cannabis-infused drinks and 3 chocolates as the company prepares for the launch of Cannabis 2.0 – the second wave of legalization in Canada, which technically began earlier in October.

Sales of edibles, however, will begin in mid-December as Health Canada, the country’s cannabis regulator, imposed a 60-day waiting period for products to be approved.

Many in the sector are hoping the new market for edibles and cannabis-infused beverages will provide marijuana businesses, which have been struggling this year, with a significant boost to profits.

Markets waiting to see how Cannabis 2.0 plays out

Canopy Growth gathered reporters for a testing session this week, although none of the drinks at the presentation contained actual THC. It hopes these beverages will be available for sale on December 16.

“This is meant to be a social product. To us, the mass market disruptive opportunity is to mimic beverage alcohol. That’s the home run,” President Rade Kovacevic told reporters.

As Canopy has the backing of American beverage company Constellation Brands (an investment worth $4 billion), it’s betting big on these products reviving its business after a tough year for the marijuana producer.

The broader marijuana sector’s poor performance in 2019 was largely attributed in part to Constellation Brands’ firing of Bruce Linton, the now-former chief executive and co-founder of Canopy Growth.

Current Chief Executive Mark Zekulin is expected to leave by the end of the year, when his successor is named, which could also lead to a change in the company’s strategy.

Meanwhile, the Smiths Falls-based company is also looking to cash-in on vaping. The vape products are also slated for a December release.

Nevertheless, with many claiming the marijuana stocks bubble has officially burst, analysts are increasingly warning investors to exercise caution with cannabis companies.

Canopy is now down over 60% from its 52-week high of $70.98 on the Toronto Stock Exchange. Still, the long-term outlook for the industry remains bullish, particularly as the edibles market takes off.

A Deloitte report from earlier this year estimated the market for cannabis-infused drinks and treats could be worth $2.7 billion annually.

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