Canopy Growth Corp has never been in better shape, Mark Zekulin says

Canopy Growth Corp (Canopy Growth Corp Stock Quote, Chart, News TSX:WEED) may be in search mode for a new CEO at the moment but Mark Zekulin has nothing but praise for his company.

There has been a gloomy picture painted by WEED’s share price of late, but the current CEO thinks Canopy is in great shape as “Cannabis 2.0” nears ever closer.

It’s been two months now since the bombshell dropped that Canopy co-CEO and Bruce Linton was fired, reportedly on concerns from alcohol giant and partner company Constellation Brands that their pot investment wasn’t showing fast enough signs of bearing fruit.

And while Canopy, considered to be the leading name in the field, still searches for Linton’s replacement, Zekulin says all the hard work put in by his employees over the years is about to pay off as the Canadian edibles gets ready to open up at the end of the year and as the US continues to establish itself in the hemp and CBD products market.

“Canopy has never been in as good a spot as it is in today,” Zekulin said to BNN Bloomberg last Friday. “For five years, we’ve been focused on the long term. We’ve been building large-scale infrastructure, intellectual property and this great team to execute those things.”

“What really excites me is that in Canada we’re on month 70 of our construction platform and we have four months left,” he added. “We can now take all that energy and infrastructure that has been focused on building and really shift to that operating mentality —asset utilization, efficient processes— and really execute on those things that we’ve talked about — margin levels, adjusted EBITDA. And as we shift to that operator mode in Canada, we can take all of that knowledge we’ve built in Canada and we’re now actively deploying it into building mode in the United States.”

Recently, Canopy’s poorly received quarterly performance has been acting as a stand-in for concerns industry-wide over the path to profitability, as industry watchers reflect on the billions of dollars invested in dozens of pot companies in hopes that the profits will start rolling in once they’re up and running.

Canopy reported its first quarter fiscal 2020 in mid-August, showing a loss of $1.28 billion or $3.69 per share for the three months ended June 30 and revenue up almost 250 per cent year-over-year to $90.5 million. The numbers compared to analysts’ expectations of a loss of $0.70 per share on revenue of $107.1 million.

Those losses kept Canopy’s share price sinking, a trend that has brought the stock down to the $32.00 per share mark, well off the $70.00 it was trading at earlier this year.

Canopy has been strident in its push to enter the US hemp and CBD markets which began opening up on changes this year to federal regulations. At the same time, the company continues to eye the medical and adult-use cannabis markets south of the border, famously striking a deal with US multi-state operator Acreage Holdings this past April which would see Canopy buying Acreage if and when movement on legalization comes about at the US federal level.

But Zekulin says building its presence in the US won’t lengthen Canopy’s road to positive EBITDA since the American rollout will be a lot smoother than the one still taking place here in Canada.

“We now have thousands of acres under contract with American farmers growing CBD hemp, we have our own facilities under construction in California and New York and Illinois to produce our products and we have a supply chain built out to get CBD products to market this fiscal year,” Zekulin said.

“I think we’ll see a much more rapid speed of market deployment in the US,” he said.