Canopy Growth Corp. probably couldn’t have picked a worse time to delay the launch of its line of cannabis drinks. Friday’s move came just one day after Ontario’s online pot store quickly sold out of all edibles and beverages on the first day of sales, leaving Canopy to potentially miss out on strong consumer demand.
Canopy, which is the largest cannabis company by market value, said Friday that it hasn’t finished scaling up its beverage production facility in Smiths Falls, Ontario. It didn’t give a revised timeline for the launch, but said it doesn’t believe the delay will have a material impact on its fiscal 2020 revenue.
It intends to give an update when it releases its fiscal third-quarter results, which are expected on Feb. 14. Shares were down 2.6% in early trading Friday.
The company said last month that the first wave of drinks would hit shelves in early January, followed by additional products in February. Canopy’s largest shareholder is alcohol giant Constellation Brands Inc., which has been helping it with beverage development.
“Today’s update will do little to satisfy investors who have already seen Canopy downgrade sales guidance twice this fiscal year,” said Jefferies analyst Owen Bennett. “We also note there appears no excuse for this announcement, with the delay caused by lack of clarity internally rather than unforeseen external factors, which is even more worrying.”
The delay comes as initial demand for edibles and beverages appears strong. The Ontario Cannabis Store introduced 21 new edible and beverage products on Thursday. Of those, 76% were sold out within the first hour, and they were completely sold out as of 3 p.m., according to Cowen analyst Vivien Azer.
“We admittedly do not know the inventory levels,” Azer said in a note. “That said, we view the out-of-stocks as a positive for consumer demand in the category.”
In the vapor category, which was introduced at the same time, only 32% of products were out of stock by the end of the day. Azer expressed “sticker shock,” with half-gram products selling for an average of C$78 with the most expensive coming in at C$140.