(Reuters) - Pot producer Canopy Growth Corp reported better-than-expected quarterly revenue on Thursday, as efforts to strengthen its retail operations paid off and increased production capacity resulted in higher sales following Canada’s legalization of recreational cannabis.
Marijuana companies in Canada have been pouring cash into their businesses to open stores and expand operations as the list of medical and recreational approvals for marijuana use globally grows.
Canopy Growth, the largest pot producer by market value, in April offered to buy Acreage Holdings Inc for $3.4 billion, betting on broader legalization in the United States. The deal was approved by shareholders on Wednesday.
Last month, Canopy Growth said it would buy skincare company This Works for C$73.8 million ($55.2 million), adding beauty and sleep products to the Canadian weed producer’s portfolio of cannabis oil, hemp and medical capsules.
Canopy Growth said it sold 9,326 kg (20,560 lbs) and kg equivalent of cannabis in the fourth quarter ended March 31, up from 2,528 kg and kg equivalents sold in the year-ago period.
Net revenue of Canada’s biggest weed producer by market capitalization rose 312% to C$94.1 million ($71.37 million) in the quarter, from C$22.8 million a year earlier.
Analysts on average had expected Canopy Growth to report revenue of C$92.6 million, according to IBES data from Refinitiv.
Canopy Growth said it expects the Acreage deal to close on June 27, with the company recording a non-cash charge that will have a materially negative impact on its net income in the first quarter of fiscal 2020.
Reporting by Arundhati Sarkar and Ankit Ajmera in Bengaluru