Canopy Growth CO-CEO Bruce Linton (NYSE: CGC) (TSX: WEED)


Talk a little bit more about the quarter from otto bruce nice to see you you know just to pick up on lauren i’m just talking about with áfreeá you guys have been a highly acquisitive company that company now looking to make some changes on the corporate governance side because there’s a lot of activity very quick changes and they want to make sure that everything

They do is correct and that the right governance is in place have you guys had your own conversations around those kind of issues as well yeah you know i can’t comment on where they are but like simple things at our spot from day one if you’re working for me or anybody reporting to me or reporting those people you can’t buy stocks in companies in the sector can’t and

The reason is what if we want to buy that company it looks like we’re self dealing and what if we actually want to run them over maybe you’re bias about running them over and so we just kept it clean from day one and i think when you’re doing transactions in our space there’s a lot more things that sound good than are actually good so due diligence is an internal

Full-time gig we have probably four people who do nothing but look at things all the time and if you’re out in the network long enough you actually know every player and what’s going on and so there’s nothing for us to buy in canada there are things that we picked up in colorado like a boo or germany like storz and bickel but you know you can’t clean up you just

Have to stay on the right track and go on and so that’s interesting so is it any employee or only those at the management and board level that are not allowed to have holdings in any other marijuana company and how long is that yeah they just i think i’ve said no to a thousand deals since i stopped started this thing and all the people like tim a market report to

Me and the folks are tied to them it’s just it’s understood guys this is not you can’t appear or in fact be self dealing and that’s been since day one and guess what the number of deals that come through every week they say you know we’d almost give you the stock so we could put your name on it are quite significant so probably it’s a fiscally stupid move on my part

For everyone but it’s a lot of sustain focused and clean so you are clearly indicating there are more acquisitions on the way that was one of the takeaways from what you talked about with analysts and you’ve been very clear interviews on this network you just alluded to it again but you’re not really looking to do transformational deals here in canada bruce give

Us some a sense on what you’re going to be doing over the course of 2019 how much you want to spend on deals and where you’re looking to do them yeah so in canada we have about 6 million square feet of greenhouse and/or indoor production so lots of stuff to growth we have a platform for extracting the ingredients out when we’ve built our own platforms for making


Everything from chocolate to bottle beverages so i don’t need a partner and what apartment means in business usually is somebody who takes half the margin and necessarily doesn’t do half the work so we’re not looking for that but when you go globally there’s a big pharmaceutical opportunity so we’re always looking at is there a pharmaceutical element to company

That could spin out or is there a company that was wrong in their sort of molecule strategy and need to start aiming at our stuff there’s a whole bunch of greenhouse platforms in different countries to buy and build but really what we’re now doing is international so we’re you know our next big wave is hemp in the us and that means building out things that start

Looking like what was the hershey factory in this falls there’s a whole bunch of infrastructure in different us states that becomes filled with us and so you’re gonna see us ever more global and probably in about a year when i talk to you you’ll say you know this great company that is a globally driven revenue source happens to be headquartered in canada because

That’s kind of how it’s evolving but you make an interesting point because you’re in so many different types of business lines whether it’s half of me you’re working on experiments for animal based applications of cbd you’ve got recreational and you’ve got medical i mean are you doing this in the mean time till we get recreational legalization in the united states

And then the company kind of focuses up on on that market or is there a true benefit to being spread kind of everywhere that marijuana can go that seems to be where you’re going does that you know perhaps cause the risk or lead to the risk of being spread too thin and not being focused enough so we have kind of four structured steps in our business the first is

What everybody talks about it’s actually going to become the least exciting which is how do you produce the ingredients meaning how do you grow cannabis or how do you synthetically convert it but those are ingredients and there are hundreds or more than a hundred ingredients in a cannabis plant then there’s a process of getting those ingredients out so you can

Keep them separate and do the next thing which is how do we mix them back together to create medical outcomes or health and wellness or veterinarian products that’s all the science and then you take all that learning you say how do i make really great beverages we use the science from that and then the marketing and branding so it’s more like a vertical stop stack

That over time has a whole bunch of intellectual property in the markets we go to are the ones which federally permit those activities so in germany there’s no party but there’s a lot of patients in canada there’s becoming a pretty good party with a lot of patients and well you could say well do laughs but the end game then is to be not significant and right now

We’ve structured ourselves we’re in every country we have great leaders in every line of product we have focused people and so it’s a matrix management which enables me to do virtually nothing because there are competent people doing everything another combination works very well let’s talk a little bit more about how you’re financing your future you talked to us

Many times about you know a bunch of years ago you use the fact that you were a publicly traded company and your stock to grow the business it was difficult to get your hands on capital from big institutions here in canada now you’ve got a lot more say on what you ultimately do as you do deals or do anything to grow the business are you looking to the the equity

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Market are you looking to to the bond market are you gonna take out any any loans i mean just give us a sense on your financial plans going forward from that’s perspective oh it’s a good question so we now have a thing called treasury department because we have about five billion dollars and so we have that cash distributed over i think five of the big banks in

Canada and a few in the us so now we have cash and now we have a very valuable currency in our stock and so when we go to do things if we’re building something we have to use cash when we’re buying things we try to use cash and often people want shares and up with a blend but now what starts to happen is very sophisticated financial groups come to you and say

You have three or two and a half billion dollars of real estate intangible assets would you like us to give you money back for that so we start having interesting discussions in all of the fields but when shareholders look at us now we have i don’t know it adds up to almost 20 bucks a share cash and so the effect of that is we have a lot of options and they don’t

Look kind of like they did when i first talked can be you guys which i think i have my hat up usually saying and anybody listening if you want to invest call me that’s evolve slightly so that means you could potentially go and tap the debt markets for and start issuing bonds that would you know is that something you’re considering first and would that go towards

Your initiative of trying to get a stronger institutional base of investors yeah so we did in june a convertible debentures that was about ninety four ninety five percent placed outside of canada with big institutions and so the next thing that would make sense over a course of time if when when we need it would be for sure just a straight bond but this is kind

Of interesting right now we’re talking about a canadian started canadian headquartered cannabis company that’s now looking at bond quality investing and that makes us a very different company in the sector and that we’re an investment and people will invest and there are other places you might place a bat but those are bats and so it’s it’s kind of good to be the

Quality i talked about what your credit rating could potentially mean you talk about quality with the investment great well you know it’s funny because canada i think we’re gonna establish as an excellent business and we’ll be able to report on that as the year rolls out here’s what’s happening in canada if you normalize the spend meaning if we have 50 researchers

Working on stuff for the globe we don’t put all that cost against canada you put a proportion i bet by the end of the year this looks like a terrific business and people are gonna have a choice do they want to see us repeat this around the world because that’s what we’re gonna do or do they want to dip in em and on that occasion they may choose to sell my stock

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And buy bank because we’re not here to head out dividends we’re here to create a dominant platform for the next five years so i’m reminded of some commentary booth the aurora ceo said this week when he when he said i lose sleep over the ability to supply the global market i’m curious what you’re losing sleep over and also the losses bruce a lot of people pointing

To how much the company is losing as part of this growth plan right now what should we be thinking about when it comes to what those losses are going to look like in the foreseeable future yeah so three things we’re doing a sleep trial phase 2b which means humans using canopy’s products to sleep the spectrum brands so i hope that gets the results we expect by the

End of q4 because then i can actually help the other people in the sector sleep they’ll fail to buy our product but what losses right now are associated with operating in canada and finishing the construction and implementation and operation of about six million square feet most of which has been completed and is just turning up with pilot growth so as we finish

The next quarter or two what we’re doing are running things that are causing our losses now to produce all the inputs so that when the new regs which will effect in q4 come up for beverages and edibles that full platform will be running which means we’ll have a lot of product that people can buy and i think that will look terrific where i think the stress should

Be for all of us in the sector is the regulations for canada and the world have to keep rolling out because we can’t exercise our business until there are rules and the place just south of us is almost at the spot where i think they’re gonna have rules that let us enter more than hemp and so it’s the if when and how quickly can we jump and so we spend a lot of time

Focusing on the us and global opportunities i think canada’s gonna turn out to be a very good business run by very competent people as a division of our enterprise first i just want to expand on something you said there as investors look to the path to profitability so fine your losses are growing right now and the market doesn’t seem to care about that but they

Want to see a path to profitability in this quarter you saw your costs increase and the prices that you were selling your marijuana for in the recreational market or sorry overall lower so are you telling me that those are the dynamics going forward but it’s gonna be offset by new initiatives whether it’s in beverages or those third and fourth other initiatives

That you’re trying to do or that those dynamics that higher costs and lower selling price itself are going to change and lead to a path to profitability yes our actual canadian cost suppose you have a green house maybe the three million square feet you don’t put it all in play at once what you do is you keep doing it maybe three hundred thousand square feet at a

Time but what we have is all of the operating costs of

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Canopy Growth CO-CEO Bruce Linton (NYSE: CGC) (TSX: WEED) By RICH TV LIVE

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