Canopy Growth Reports Stronger Q2 FY2026 Performance with Improved Profitability, Cost Discipline, and a Strengthened Balance Sheet
Canopy Growth Corporation announced its financial results for the second quarter of fiscal 2026, ended September 30, 2025. The report highlighted continued progress in operational discipline, improved adjusted EBITDA, stronger financial health, and steady growth across core cannabis segments.
Building a More Competitive and Profitable Canopy
Chief Executive Officer Luc Mongeau emphasized that the company’s transformation strategy is beginning to deliver tangible results.
“We’re building a stronger, more competitive company defined by continued momentum in Canada’s adult-use cannabis, consistent growth in Canada’s medical cannabis, and a disciplined approach to strengthening our balance sheet,” said Mongeau. “Together, these actions give me confidence in our ability to sustain progress and deliver results for quarters to come.”
Chief Financial Officer Tom Stewart echoed these sentiments, noting that Canopy Growth’s financial discipline and operational rigor are creating the foundation for long-term profitability.
“Our financial discipline continues to improve our path to profitability,” said Stewart. “Through cost reductions, margin expansion, and balance sheet strength, we’re building a more resilient company poised for long-term success.”
Financial Performance Overview
For the second quarter of fiscal 2026 (Q2 FY2026), Canopy Growth reported consolidated net revenue of $67 million, a 6% increase from the $63 million reported in Q2 FY2025. The results demonstrate the company’s ability to achieve sustainable top-line growth while improving operational efficiency and reducing costs.
Cannabis Segment Performance
Canopy Growth’s cannabis net revenue totaled $51 million, up 12% year-over-year. The company’s two primary growth engines—Canada’s adult-use and medical cannabis markets—delivered strong performances that more than offset headwinds in international markets.
- Canada Adult-Use Cannabis: Net revenue reached $24 million, a 30% increase from Q2 FY2025. Growth was primarily driven by the success of new product launches such as infused pre-roll joints (“PRJ”) and All-In-One vapes under the Tweed and 7ACRES brands. These products, introduced in Q1 FY2026, have resonated strongly with consumers seeking convenience, flavor innovation, and premium quality.
- Canada Medical Cannabis: Revenue rose 17% year-over-year to $22 million, fueled by an increase in insured patient numbers, higher order volumes, and an expanded product range tailored to patient preferences.
- International Cannabis Markets: Revenue declined 39% to $5 million, mainly due to supply chain disruptions and logistical challenges in Europe. Canopy Growth has since mobilized efforts to stabilize its European medical cannabis operations and expects gradual improvement by the end of fiscal 2026.
Storz & Bickel
Canopy’s vaporizer subsidiary, Storz & Bickel, generated $16 million in revenue, representing a 10% decline from Q2 FY2025. The decrease was attributed to lapping strong prior-year sales and continued economic uncertainty in several key global markets. However, the company launched its latest innovation, VEAZY™, in September 2025, which is expected to drive renewed momentum in the upcoming quarters.
Profitability and Cost Discipline
Canopy Growth continues to make significant strides in improving profitability through efficiency initiatives and disciplined cost management.
- Consolidated Gross Margin: Came in at 33%, down 200 basis points year-over-year but showing a strong sequential improvement of 800 basis points from Q1 FY2026.
- Cannabis Gross Margin: Declined to 31% from 36% a year earlier, largely due to reduced high-margin international sales and increased inventory provisions. However, these impacts were partially offset by domestic growth and production efficiency gains.
- Storz & Bickel Gross Margin: Improved notably to 38%, up 600 basis points from Q2 FY2025, as last year’s margins were impacted by discounts on discontinued inventory.
On the expense side, Selling, General, and Administrative (SG&A) costs decreased 13% year-over-year, reflecting the benefits of Canopy’s ongoing restructuring and cost-reduction initiatives. Since March 1, 2025, the company has captured approximately $21 million in annualized savings and continues to identify further efficiencies.
Improved Operating Results
Canopy Growth reported an operating loss of $17 million from continuing operations in Q2 FY2026, representing a 63% improvement over the $46 million loss recorded in the prior-year period. The improvement was largely driven by the substantial reduction in operating expenses and a focus on higher-margin product lines.
The company’s Adjusted EBITDA loss narrowed to $3 million, compared to a $6 million loss in Q2 FY2025. This marks one of the company’s most stable quarters in recent years, signaling progress toward achieving sustainable positive EBITDA.
Strengthened Balance Sheet and Cash Flow
Canopy Growth also reported significant improvement in its cash flow and debt position:
- Year-to-date free cash flow was an outflow of $31 million, compared to a much larger $112 million outflow during the same period in fiscal 2025. The improvement reflects reduced cash interest payments, lower debt balances, and better working capital management.
- The company also made US$50 million in prepayments against its senior secured term loan during Q2 FY2026, demonstrating its commitment to deleveraging and reducing financial risk.
Canopy Growth continues to execute on its transformation strategy with key operational, product, and market initiatives:
- Innovation and Product Pipeline:
The company is advancing a robust innovation pipeline, focusing on high-demand product categories such as infused pre-rolls, vapes, and wellness-oriented medical products. Canopy is working closely with provincial cannabis boards and retail partners to optimize distribution and drive retail visibility in Canada’s adult-use segment. - Medical Cannabis Expansion:
The company’s Kelowna-based DOJA cultivation facility now exclusively serves Spectrum Therapeutics medical patients, enhancing product consistency and innovation in the high-margin medical segment. - International Supply Chain Improvement:
To address challenges in Europe, Canopy has mobilized a dedicated task force to improve supply chain execution. The company expects these efforts to stabilize operations and restore growth momentum by fiscal year-end. - Storz & Bickel Growth Outlook:
A full quarter of VEAZY™ sales, combined with the typical seasonal strength in Q3 holiday demand, is expected to support sequential revenue growth for Storz & Bickel. However, management cautioned that tariff-related pressures in the U.S. could partially offset gains in certain markets. - Cost Optimization Initiatives:
Canopy Growth is taking deliberate steps to lower its cost of goods sold (COGS) through process streamlining, investments in production efficiency, and tighter supplier management. These actions are expected to enhance margins and further reduce cash burn in upcoming quarters.
Outlook for the Remainder of Fiscal 2026
Looking ahead, Canopy Growth aims to build on its Q2 momentum by continuing to strengthen its core business, advance its innovation strategy, and achieve operational excellence. The company’s focus for the second half of fiscal 2026 includes:
- Expanding its leadership position in Canada’s adult-use cannabis market through differentiated brands and premium product offerings.
- Further growing its medical cannabis base by introducing new formulations and expanding patient access programs.
- Driving efficiency gains across cultivation, manufacturing, and distribution.
- Maintaining disciplined capital allocation and pursuing additional debt reduction to support financial resilience.
Management Confidence in Future Performance
Both Mongeau and Stewart reiterated their confidence in Canopy Growth’s ability to continue its transformation journey. The company’s operational progress, combined with improved financial discipline, sets the foundation for sustainable profitability.
With ongoing innovation, a sharper focus on high-margin product lines, and a proactive approach to market challenges, Canopy Growth remains well-positioned to capture growth opportunities in Canada and beyond.
