A $4 billion deal capable of transforming the state of the cannabis industry is likely to capture investors' attention. That's exactly what happened for Canopy Growth Corporation (NYSE:CGC) on Wednesday. The top Canadian marijuana grower announced that large alcoholic beverage maker Constellation Brands (NYSE:STZ) shelled out $4 billion (around 5 billion in Canadian dollars) to up its stake in Canopy.

But lost in the admittedly deserved hoopla over the Constellation deal was the fact that Canopy Growth reported its fiscal 2019 first-quarter results Wednesday, too. And the company's Q1 update contained some really great news.

Marijuana buds on top of tiny Canadian flags.

Image source: Getty Images.

By the numbers

Canopy Growth reported Q1 revenue of CA$25.9 million. That reflected a year-over-year jump of 63%. Perhaps just as impressive, Canopy's sales increased 14% from the previous sequential quarter.

One particularly interesting aspect of Canopy's revenue growth is that it was boosted by a higher average selling price. The company said that its average selling price per gram increased by 12% year over year and 6% quarter over quarter to CA$8.94. 

There were two good reasons why the average selling price jumped. First, Canopy enjoyed a more favorable product mix in Q1. In particular, oil sales accounted for 26% of the company's total revenue, up from 23% of total revenue in Canopy's fiscal 2018 fourth quarter. Second, sales of medical cannabis in Germany generated 14% of total revenue. The average selling price per gram in the German market was CA$13.62.

The main negative for Canopy in Q1 was that its bottom line worsened. The company reported a first-quarter net loss of CA$90.8 million, or CA$0.40 per share. In the prior-year period, Canopy's net loss was CA$9.2 million, or CA$0.06 per share.

However, this widening loss shouldn't be a serious concern for investors. Canopy upped its spending in anticipation of the opening of the recreational marijuana market in Canada in October 2018.

The company ended its first quarter with a much larger cash stockpile, thanks primarily to the issuance of 4.25% convertible notes. Canopy reported cash and cash equivalents of CA$658 million as of June 30, 2018, more than double the CA$323 million on hand at the end of its fiscal year 2018. This amount doesn't include the massive influx of cash stemming from the just-announced deal with Constellation.

Beyond the numbers

It was a busy quarter for Canopy Growth. In addition to posting solid financial results, the company acquired Annabis Medical, a medical marijuana distributor in the Czech Republic, and Daddy Cann Lesotho, which is positioned to supply medical cannabis in Lesotho and potentially South Africa. Canopy also continued its efforts to ramp up production capacity in British Columbia, Quebec, and Ontario, plus developing a regional distribution center. 

Perhaps most important, Canopy geared up for the coming recreational marijuana market. It built up inventory in anticipation of high demand. The company developed cannabis retail and education programs. Canopy also made plans to roll out its Tweed retail stores.

The company made considerable headway in Q1 lining up supply agreements with provinces for the recreational market. These efforts continued subsequent to the first quarter with Alberta and British Columbia inking deals with Canopy. So far, the company's multi-year supply agreement commitments translate to an annualized delivery of more than 67,000 kilograms -- roughly 36% of the total supply committed to Canadian provinces and territories.

Looking ahead

Canopy's prospects in the Canadian recreational cannabis market appear quite bright. The company has the capacity. It has the supply agreements. It has the retail strategy. 

Of course, Canopy also has a lot of money and a huge partner in Constellation. Canopy Growth CEO Bruce Linton said during the company's conference call that the company plans to make multiple acquisitions. He specifically mentioned the possibility of picking up bottling operations in Canada and perhaps additional greenhouses in other countries. Linton also hinted at the prospect of buying a "down on their luck" biotech.

Canopy Growth has its targets set on much more than just the Canadian market. Linton thinks that the global opportunities are developing faster than many think they are. If he's right, Canopy should keep its momentum going.