Vanmala Speaks: Canopy Growth Ain’t Sellin’ Oil

Anyone following the cannabis space has learned there are a couple of writers that are must read television, and I don’t think anyone would disagree that one of those is National Post writer, Vanmala Subramaniam. This morning Vanmala published a piece giving us further insights into Canopy Growth Corp’s (TSX: WEED) (NYSE: CGC) sales mix.

They are just not selling. We have been talking to Canopy for some time now about the issues with their oils and gel capsules. They have known for months that most of the retailers are having problems selling them

Mark Goliger, CEO, National Access Cannabis (Source: National Post)

This shouldn’t be a huge surprise to anyone who pulled up the Q1 and Q2 sales mix breakdown, it was pretty evident oils sales have slowed down considerably for the Hershey Cannabis Maker:

In case your not able to pick it up from above, I put this in a nice little graphic:

You probably now can see that Canopy sold a significant increase of bud in Q2, but sold far less oil in the same period.

In the company’s Q2MD&A, they state there may be an oversupply of oils, and chalk it up to incomplete retail platforms in most provinces.

Another great tidbit from Vanmala’s piece:

One pot shop owner in the Greater Toronto Area, who asked not to be named for fear of damaging his relationship with Canopy, told the Financial Post that Tweed’s gel capsules were amongst the “worst-selling” cannabis products in his store, but also noted the store itself was partly to blame for the inventory backlog.

This makes sense. Not to down play the medicinal effects that cannabis can have, but cannabis gel caps probably will be a small niche market and ultimately have small margins.

My conversations with California cannabis operators indicate a specialty market with small margins. And if we look to alcohol, no one is buying alcohol tablets yet, which a Russian professor has claimed to invented. Perhaps the next RTO candidate?

Information for this briefing was found via Sedar, Canopy Growth Corp. and the National Post. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.