Canada's largest publicly traded marijuana company says it has had a hard time keeping up with demand for high-potency pot as its list of registered medical marijuana patients more than tripled at the end of last year.
Canopy Growth Corp. (TSX:WEED) says about one-third of its customers want moderate to high levels of THC, the psychoactive chemical in marijuana, and they're willing to pay a premium price for it.
"And we really didn't have that in the (October-December) quarter – almost ever,'' CEO Bruce Linton said Tuesday on a conference call after the company reported its third-quarter results.
Mr. Linton said Canopy Growth has been hurrying to meet demand, expanding its production capacity and acquiring other producers. It also saw its medical marijuana patient base balloon to 29,000 at the end of last year from 8,000 as of Dec. 31, 2015.
To meet demand, Canopy Growth has been developing a medical marijuana product containing 27 per cent THC over the last 18 months. It's awaiting regulatory approval to start production.
The company also reported $1 million in sales in a single day for the first time, on Feb. 1, a remarkable number considering total revenue during the third quarter was less than $10 million.
"We had a fairly substantial amount of some reasonably pricey and high-THC products that were eaten up," Mr. Linton said.
At Smiths Falls, where Canopy Growth has converted a former Hershey chocolate plant into its head office, the company has opened more grow rooms, some of which are being renovated to become two-storey production facilities.
Canopy Growth also has plans to expand its production capacity at other locations, including those recently acquired after its purchase of Mettrum Health Corp. in an all-stock deal that closed Jan. 31.
Mr. Linton said Canopy is poised to expand further when the federal government announces how it plans to open up a recreational marijuana market, which is expected in the spring.
"The only update I'd offer is that the provinces, at varying levels, seem to be quite actively engaged," he said.
"Whereas it has always been a federal agenda ... what we've been seeing for some time is real active engagement from a few of the provinces as they set up their own level (of implementation)."
For the three months ended Dec. 31, revenue was $9.8 million, up from $3.5 million a year earlier. Net income for the quarter was $3.0 million or two cents per diluted share, a turnaround from a loss of $3.3 million or four cents per share in the third quarter of fiscal 2015.