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Canopy Growth: Moving to Products with Higher Margins

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Jul. 31 2019, Updated 1:58 p.m. ET

Higher margins

Canopy Growth (WEED) (CGC) has been cognizant about the fact that the commodity nature of dried cannabis might not be a key growth category. The company is moving towards more value-added products, which also have the potential to earn higher margins. Aurora Cannabis (ACB) is moving the same direction. The company stated that cannabis oil carries a premium over dried cannabis, which would result in higher margins.

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Acquisitions

Canopy Growth thinks that the vaping product category will have high growth, which led the company to acquire vaporizer maker Storz & Bickel. Canopy Growth said, “As Storz & Bickel continues to become further and fully integrated within the Canopy Growth ecosystem, the Company anticipates that sales and revenue generated will continue to increase as we expand product availability within our internal and partnered sales channels.”

Canopy Growth was pleased to acquire Storz & Bickel’s intellectual property portfolio. Canopy Growth said that Storz & Bickel has “greatly benefited” its innovation team. The company stated that it will unveil Canopy branded vape products in 2020.

Other companies are focusing on beverages and edibles like HEXO (HEXO), which has a partnership with Molson Coors.

Considering the stigma that cannabis carries since it’s illegal in global markets including the US, cannabis still has a long way to go to before it’s mainstream. However, the world is opening up to cannabis.

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