What happened
Shares of Canada-based Canopy Growth (CGC 2.34%) popped Tuesday, but not because of its Canadian marijuana business. Canopy shares soared by as much as 14.5% in early trading, and remained up by 4.5% as of 2:58 p.m. ET.
So what
Canopy has been working to consolidate its operations and focus on its core cannabis operations. It recently sold its BioSteel sports nutrition business and one of its Ontario facilities. Canopy will now rely on its other Ontario facility and a British Columbia site for its flower cultivation business.
On Tuesday, Canopy announced that its Kincardine, Ontario, cultivation facility has received EU GMP (Good Manufacturing Practices) certification. That allows the company to keep exporting its certified medical marijuana to Europe and elsewhere around the world from that facility.
Now what
Canopy Growth CEO David Klein called the certification a "significant milestone" for the company's long-term growth plans. It's also induced a rebound for the company's stock, which had declined by more than 25% over the past month. That slide came as excitement over possible progress toward federal cannabis legalization in the United States waned.
NASDAQ: CGC
Key Data Points
But Canopy isn't just relying on the U.S. market. It also serves medical markets in Germany, the Czech Republic, and Poland, and some in the Asia-Pacific region. Overall sales in its domestic Canadian market were about $28 million in the company's fiscal 2024 first quarter, which ended June 30. Medical cannabis sales represented nearly 40% of that.
Outside of Canada, Canopy generated another $7.4 million in cannabis sales. The company expects the new certification to allow it to penetrate new markets as they legalize medical cannabis use, complementing its growth strategy.
Investors reacted positively to that Tuesday, but Canopy still reported a net loss in its fiscal 2024 first quarter. Investors might not have jumped into the company's shares based on Tuesday's news if the stock wasn't coming off a severe recent decline. For now, though, that news has helped it recover some of those losses.
