Canopy Growth reported consolidated net revenue of C$67 million for the quarter ended September 30, 2025, up 6 % year-over-year. Within that, cannabis-net revenue rose to C$51 million, a 12 % increase compared with Q2 FY2025.
The adult-use Canada segment delivered C$24 million in revenue, up 30 % versus the same period a year ago, driven by infused pre-roll joints and new all-in-one vape formats. Meanwhile, the medical cannabis business in Canada achieved C$22 million in net revenue, up 17% year-over-year, driven by higher insured patient volumes, larger order sizes, and broader product assortments.
However, the international cannabis segment declined sharply, with net revenue of C$5 million, down 39% from a year prior, reflecting supply-chain constraints in Europe. The company’s Storz & Bickel-branded business generated C$16 million in revenue (down 10 %) as it lapped strong prior-year sales and faced consumer-spending headwinds. However, a new product launch (VEAZY™) in September 2025 offers some upside.
Margin, cost control, and free-cash-flow-improvement
Gross margin for the quarter stood at 33 %, a 200 basis-point decline from the same quarter last year. The sequential improvement (up 800 bps vs Q1) points to operational gains. Specifically, the cannabis segment’s gross margin slipped to 31 % (from 36 % prior), reflecting a lower contribution from higher-margin international markets and increased inventory provisions, partially offset by manufacturing efficiencies and Canadian growth. Conversely, the Storz & Bickel margin rose to 38 % from 32 % a year ago, helped by the discontinuation of older product lines and higher-margin newer SKUs.
On the expense side, SG&A costs declined 13% year-over-year, and the company reported capturing C$21 million in annualised savings since March 1, 2025. Operating loss from continuing operations narrowed to C$17 million, an improvement of 63 % versus Q2 FY2025. The adjusted EBITDA loss improved to C$3 million (versus C$6 million the prior year). Year-to-date free-cash-flow outflow was C$31 million (versus C$112 million in the previous year period), mainly due to lower interest payments and debt reduction.
Perhaps most relevant for investors, cash and cash equivalents stood at C$298 million as of September 30, 2025, exceeding reported debt balances by about C$70 million, resolving prior “going-concern” doubts.
Strategic outlook and investor implications
Canopy Growth highlights several strategic actions aimed at sustaining momentum:
- A pipeline focused on differentiated formats and tighter retail/commercial alignment aimed at further adult-use growth in Canada in the second half of the fiscal year.
- The DOJA cultivation facility (Kelowna-based) is now dedicated to Spectrum Therapeutics medical patients, supporting higher-value Canadian medical cannabis operations.
- A dedicated supply-chain initiative in the European medical business is underway, with expectations for stabilisation by year-end.
- A full quarter of VEAZY™ S&B-device sales plus holiday-season strength is expected to support sequential growth in Q3. However, tariff pressures may limit U.S. market access.
- Further cost-of-goods-sold reductions via process streamlining, investments in yield/quality, and tighter supplier management.
For investors in the cannabis sector, the takeaway is mixed but improving. On the positive side: meaningful Canadian adult-use and medical growth, margin expansion in the device business, debt reduction, rising liquidity, and cost discipline. On the caution side: international exposure remains weak, overall profitability is still a loss, and macro/consumer risk (particularly in export/device markets) remains.
What to watch next
Key upcoming events and metrics:
- Monitoring Q3 results (ending December 31, 2025) for sequential improvements in adult-use, device-business growth, margin gains, and free-cash-flow heading toward break-even.
- Regulatory, tariff, and consumer-spend trends in the U.S./Europe remain risk factors.
- Execution of the innovation pipeline and the commercial rollout of new formats will be key drivers of future growth.
Rita Ferreira
Rita is a seasoned writer with over five years of experience, having worked with globally renowned platforms, including Forbes and Miister CBD. Her deep knowledge of hemp-related businesses and passion for delivering accurate and concise information distinguish her in the industry. Rita's contributions empower individuals and companies to navigate the complexities of the cannabis world, and her work remains a valuable resource for those seeking a deeper understanding of its potential.
