Internationalization of Canopy Growth Corp

4903 words (20 pages) Essay in International Business

23/09/19 International Business Reference this

Disclaimer: This work has been submitted by a student. This is not an example of the work produced by our Essay Writing Service. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Internationalization of Canopy Growth Corp

Co-founded by Bruce Linton and Chuck Rifici in 2013 headquartered in Smith Falls, Canada based Canopy growth Corp (CANOPY) formerly known as Tweed Marijuana Inc. has 21 subsidiaries and many affiliates (See Exhibit A). It operates in 15 countries across 5 continents. 1 CANOPY trades on the Toronto Stock exchange as WEED and became first cannabis company to get listed on the New York Stock Exchange as CGC. In 2016 CEO Bruce Linton said during Mayor’s Breakfast Series “We want to be really not very Canadian. We want to dominate the world, “2. It has subsidiaries, partnerships in Germany, Chile, Columbia, Denmark, Jamaica, Lesotho, Australia, Brazil, Czech Republic and Spain as per Exhibit B. It is a multi-brand Cannabis and hemp company and has worlds recognized brands- Tweed, Spectrum Cannabis, DNA Genetics. Canopy has ten licensed production sites with over 4.3 million square feet of capacity, including over 500,000 square feet of GMP certified production space 3, 3a. It operates many Tweed retail stores and has secured supply agreements with each Canadian province 4. They are stepping first step into US market now. Recent Farm Act in Dec 2018 gave them an entry in the US. Canopy supplied first medical cannabis legally to US for research purpose to their Colorado based Hemp research company, ebbu Inc. As per RTTNews CANOPY is the world’s biggest Marijuana company 5.

What is Cannabis?

Cannabis or marijuana is a plant based psychoactive drug. It is used for medical and recreational purposes because of its mental and physical effects, but its intoxicating and addictive properties make it illegal in most countries in the world.

International Cannabis market overview

The global cannabis market is forecasted to reach $140 billion/year by 2027 6. Canada is the 2nd G20 country after Uruguay to legalize marijuana for adult recreational use. Medical Cannabis was legalized in Canada back in 2001 and recreational Cannabis was legalized in Oct 2018. Several countries have legalized Medical Cannabis recently and more countries are expected to legalize it for medical purpose. Uruguay and Canada are the only countries that fully legalized the consumption and sale of recreational cannabis nationwide 7. Canada has developed regulatory framework and companies working within that framework have expertise, knowledge and product share with global community18. The number of registered users and supply is growing proportionately (See Exhibit D).

Canopy Growth Corp: A global Cannabis leader in the making

Under Opium and Narcotic drug Act, Canada had banned Cannabis until 1998. Rapid increase in Cannabis popularization and users led Canada legalize medical Cannabis in 2001 but poor enforcement laws, chain of custody issues, diversion to the black market and loss of tax revenue worried authorities 8. This makes for risk-premiums that create a monopolized market with high barriers to entry, which in turn, leads to increases in violence, organized crime and the diversion of limited government resources to prosecuting drug users 9. Linton’s previous telecom experience had helped him to find a solution. “If you understand how not to lose data packets from a data network, not losing weed is way easier,” he said 10.

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Find out more

Let us apply the framework (see Exhibit F) to understand how CANOPY has expanded successfully around the globe (see Exhibit G). CANOPY became the first Canadian company to get a license to cultivate marijuana and grew faster. Culture plays an important role in expanding. CANOPY created a fund called Canopy Rivers, which invests in cannabis startups to work with them instead of crushing them, maintain a supplier relationship and eliminate competition. A clear mindset of being first movers and doing business in most regulated ways so they only targeted legally approved countries. Operating and investing in federally illegal markets put the company at risk of prosecution and potentially could jeopardize its listed on NYSE and in the future, limiting access to capital from investors18. It exhibits social responsibility of educating customers about Cannabis and run several marketing campaigns to educate customers about the benefits and dangers of cannabis like danger of driving after consuming it. Canopy provides financial support to research institutes. Next, Admin cost consideration for globalization. As Cannabis comes under the strict Compliance radar so each subsidiary, affiliate needs to follow compliance SOP guidelines. Production sites need regular maintenance and insurance to save them from unknown mishaps, security breaches, downtimes because that could incur them heavy losses. Management of supply agreements, its related formalities, documentation, approvals, government, lawmaker and investors lobbing, Canopy Rivers finance management, Regulatory compliance management etc. Geography costs. Factors like Federally legalized G20 countries for Cannabis, low-cost high-quality labor, Germany as a global hub and gives easy entry to other G20 countries, targeted US as it is the biggest Cannabis market and draws maximum investors. Another consideration is economic conditions of the host country. Canada is a stable economy, wealthiest nation in the world with low inflation and interest rate. Canadian Government supports CANOPY in terms of tax relaxation and 52 tax treaties with many countries. People in Canada would prefer to buy low cost marijuana medicines. Internationally, also it is expected that marijuana medicines will be available to cheaper rates as compared to medicines. The motivation is market seeking with high-quality, low-waged labor, increase productivity and Cost reduction, resource seeking in terms of cannabis and diversified portfolio as most of the world has banned Cannabis, improve Enterprise IT and improve supply chain management. Canopy knows that they must diversify their portfolio, develop innovative products to disrupt markets like Alcohol, Tobacco and medicines. They are seeking knowledge to develop GMP Cannabis from DNA Genetics, With Spektrum Cannabis Germany, formerly MeddCann, acquisition they are successful distributing Cannabis in more than 400 pharmacies across Germany, with Bedrocan, they wanted to import proprietary standardized Cannabis strains and know-how to the Brazilian market and improve yield efficiency. Constellation Brands (Wine, Beer, liquor company) and Canopy have collaborated for manufacturing of non-alcoholic drinks, Canopy would leverage bottling and distribution model of Constellation Brands.

Canopy has complex ownership advantages. Cannabis is valuable, somewhat rare and addictive product and that is Canopy’s biggest advantage. It is tough to imitate as most of the countries have banned it legally. Because of many mental and health benefits it has grown loyal users. Bruce Linton is the next factor. He is smart, intelligent, market seeker, has good relations with government, good captivator of the press, along with lawmakers, regulators and investors. He said “Success in future global medical markets and the recreational cannabis market in Canada will depend not only on capacity, but on strong execution and securing supply agreements with the provinces today 16. In August 2018, his biggest deal with Constellation Brands 22(Wine, Beer and spirits producer) to invest C$5B US Dollar in CANOPY is the biggest in Cannabis market history and this additional cash flow would allow CANOPY to expand in more 30 countries where medical marijuana is expected to be legalized. Expansion is necessary for them as dried Cannabis is a low margin commodity and the future will depend on product innovation. CANOPY plans to develop non-alcoholic drink in collaboration with Constellation Brands. It can leverage the bottling and distribution capacity-and regulatory know-how-of beverage industry partners to offer prospective customers a smoke-free consumption method in a familiar format 10. Linton was named 2018 CEO of the Year by the Ottawa Board of Trade and Ottawa Business Journal. He made CANOPY the first cannabis public trading company on TSX and NYSE.

Next, company big brands. CANOPY has world renowned brands like Tweed, Spectrum Cannabis, Doja, DNA Genetics, Foria etc. These are highly popular and earn huge customer loyalty. Cannabis icon Snoop Dogg that grants Tweed exclusive rights to use certain content and brands owned by the rapper’s company, LBC Holdings and in return Snoop Dogg gets cash and stock from Tweed 15.

They have supply agreements with all provinces across Canada (See Exhibit E). Canopy Rivers funds cannabis startups and in return gets the supply of dried cannabis/end goods in return see example 11. Canopy has developed Craftgrow, a partnership program that gives Cannabis patients access to multiple cannabis brands under 1 roof, new Cannabis Licensed Producers (LP) access to Canopy QA program, online marketplace, customer care and call center capabilities as well as Tweed customer base help LPs to market much faster and help customers 19. Tweed Main Street Community Engagement Centers help customers to learn more about medical cannabis in a helpful, supportive and consumer-friendly environment. Canopy (Tweed) also runs campaigns to build community awareness about the effect of Cannabis while driving.

CANOPY also strives for product and process innovation, distribution capabilities and diversified portfolio. CEO Linton has shared that Cannabis can potentially disrupt $500 billion global market. A 2014 study done in Washington State, for example, showed a 12% drop in alcohol demand after pot was legalized 12 ,13. Canopy potentially disrupts alcohol, cigarettes, in terms of smoking cessation and really disrupts pharmaceutical, because whether or not you’re geriatric care, you’re dealing with arthritic conditions, you’re someone who can’t sleep, you’re going through an oncology treatment, you’re going to find cannabinoid therapies really hit there.”- Said Bruce Linton 14. Economic conditions are also supporting Cannabis industry growth. Five years ago, banks and investors won’t touch this industry, but now they are openly supporting it to the tune of $8 Billion last year.

Structurally, CANOPY is an umbrella entity for more than a dozen subsidiaries and affiliate ventures, including consumer-facing brands – 2 brick-and-mortar chains, Tweed and Tokyo Smoke. CANOPY is a decentralized enterprise and each subsidiary and affiliates has local management but controlled by the Board of directors (See Exhibit H). CANOPY has an Omnibus Incentive Plan (OIP) to attract, retain and reward those employees, directors and other individuals with up to 15% of the aggregate number of common shares, who are expected to contribute significantly to the success of the Corporation and its Affiliates 17. There are incentives to grow Cannabis as humanely as possible by creating community-focused retail environment. Tweed strains now evoke the brand’s “tweed” theme (Donegal, Argyle, Houndstooth, Herringbone) plus whimsical pop-culture memes such as Boaty McBoatface. Tokyo Smoke’s house cannabis line has adopted a yoga-class-friendly nomenclature-Go, Rise, Equalize, Pause, and Ease. Tokyo Smoke CEO Gertner envisions it to become next “Starbucks of Cannabis” 10. I think their corporate culture of caring for the community, employees, partners, relationships with government, lawmakers and investors will further help them excel in this industry.


Canopy Growth Corp is taking every single step cautiously to grow in global markets. Bruce Linton’s charisma has helped CANOPY maintain good relationship with lawmakers, regulators and hence government are supporting them with suitable laws and tax reliefs. With increased interest shown by banks and investors, CANOPY is ready to make further acquisitions in many other countries. However, there are some risks and threats to CANOPY. These are18:

1) The protection of Intellectual property (IP) – the rely on trademarks, patents and general counsel to review unregistered IP and continuously improving IP portfolio, but still it’s a risk

2) Early stage enterprise- Expansion in US resulted high interests of banks and investors but still, it’s relatively new and has fewer financial resources

3) Dependency on licenses- License producer’s failure to comply with regulations can have high impact on Canopy.

4) Reliance on manufacturing sites- Proper maintenance and full insurance of sites to avoid security breaches, failures and overall business.

5)  The importance of key inputs- like raw material, supplier, labor, electricity, water and utilities

6) Others like Competition, climate conditions and international regulations ambiguity. CANOPY may face intense competition from companies with more financial resources and marketing experience.

It has spent most of the capital in acquisitions (See Exhibit G) and has volatile stocks 20 & 20a, but Canopy’s future looks extremely good. I think Canopy needs to keep monitoring regulations, investments in product development, distribution, IT, resourcing, retail store activity, renewal or addition of more supply agreements, increase in production, meet quality standards and satisfy shareholders.










Exhibit A Canopy Subsidiaries and affiliates, Page 6, Nov 13, 2018





Exhibit B Canopy International subsidiaries, partnerships or business activities, Page 13, Nov 13, 2018




























Exhibit C Legalities of Cannabis


C1. Recreational Cannabis status, Page visited Jan 28th, 2019

C2. Medical Cannabis status, Page visited Jan 28th, 2019

English: Map showing legal status of medical cannabis across the world.

 Legal as authorized by a physician

 Legal for any use (no prescription required) Jamesy0627144


Exhibit D Cannabis fiscal year reporting (FY 2019-19)


D1. Cannabis for medical purposes (FY 2018-19) - licensed producers: monthly data by Health Canada, Page visited Jan 28th, 2019

D2. Cannabis for medical purposes (FY 2018-19) - licensed producers: monthly data by Health Canada, Page visited Jan 28th, 2019

Exhibit E

Brian Paradza Page visited Jan 28th, 2019

Exhibit F

Canopy Growth Corp globalization framework (Self-created)




Exhibit G

Heasie Invests YouTube video “Canopy Growth Corp timeline of major events” April 13th,12018


Canopy Growth Corporation founded by Bruce Linton and Chuck Rifici


Tweed Marijuana INC was granted the license to legally produce marijuana for registered users of cannabis


The MMPR came into effect, with Tweed’s NOTL facility being the first approved


Company acquired Prime1 construction services corp.


Rifici stepped down as Tweed’s CEO and subsequently replaced by Linton


Tweed Marijuana launched a pilot project with Indoor Harvest Corp to install a state of the art aeroponic system for R&D


Tweed acquires Canadian Licensed Producer Bedrocan Cannabis Corp


Tweed Marijuana renamed itself Canopy Growth Corporation with Tweed Inc, Tweed Farms Inc and Bedrocan Canada Inc remaining separate subsidiaries under the CGC parent company


Tweed announced a partnership with DNA genetics, one of the most widely recognized and acclaimed global brands in cannabis breeding and genetics


Bedrocan announced the start of true compassionate pricing, offering all its products for $5/gram


Tweed struck a deal with Rapper and Global cannabis icon Snopp Dogg in a deal that will grant the company exclusive right to use content and brands owned by the rapper’s company, LBC Holdings


Tweed Farms was now licensed to produce, possess and ship dried marijuana at its facilities in Niagara-on–the-Lake, Ontario


Became the first company in the marijuana industry to achieve elusive $1 Billion “Unicorn” status


Tweed acquired an entire facility at 1 Hershey Drive in efforts to expand production space


Its valuation was $943 Million


Added to TSX/S&P Composite index


Acquired Tweed Grasslands


Canopy growth Corp entered into a supply agreement with AusCann Group Holdings Ltd, whereby Canopy will act as AusCann’s exclusive supplier of medical cannabis for Australian market


Constellation Brands agreed to invest C$245 Million in the company


Tweed Jamaica: A joint venture between Canopy and Grow House Ltd JA producing world-class products for the Jamaican medical cannabis market by combining Tweed’s well-established cultivation processing and international standards with the local know-how of the Jamaican team.


MeddCann GnbH was the first company in Germany to obtain licenses to import whole flower medical cannabis from Canada


MedCann was renamed Spektrum Cannabis and continues to distribute finest cannabis strains through Germany


Spectrum Denmark ApS became a joint venture between Canopy Growth and Danish Cannabis ApS to serve the needs of Danish medical cannabis patients with Spectrum’s proven world-class medical products


Expanded growing capacity in Canada through an agreement with Canopy Rivers to convert a greenhouse in Mirabel Quebec


An agreement with BC Tweed to develop 1.3 Million sq. ft of growing area in British Columbia


The company had over 665,000 Square feet of growing capacity and supported operations in seven countries


100% Acquisition of Spectrum Cannabis Chile to support company’s plans for development within LATAM region which is home to more than 600 million people


Canopy Bedrocan subsidiary and its Brazilian partner Created a new company Entrouge Phytotab to develop medical cannabis products for Brazilian and international markets


Transferred 1500 cannabis clones to Madrid based partner, Alcaliber SA, completing the first phase of a partnership


Constellation Brands massive investment of C$5 Billion in Canopy and selecting Canopy as exclusive global cannabis partner. Canopy will get help for extending its global reach in medical and recreational cannabis markets from Constellation brands.

















Exhibit H

New Cannabis Ventures Annual information form report on Canopy growth Corp. Canopy organization structure (Modified to fit in this document) Page No. 8, June 28th, 2017






Exhibit H


Cite This Work

To export a reference to this article please select a referencing style below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please:

Related Lectures

Study for free with our range of university lectures!