Canopy Growth Corporation WEED CGC announced on Thursday that it's no longer funding BioSteel Sports Nutrition Inc.
The Ontario-based cannabis giant said BioSteel has "commenced proceedings under the Canopy' Creditors Arrangement Act in the Ontario Superior Court of Justice and will seek recognition of that proceeding under Chapter 15 of the United States Bankruptcy Code to give full force and effect to the orders made in the CCAA proceeding in the United States, including a stay of proceedings."
Canopy Growth previously disclosed it was reviewing its options, including streamlining operations and cutting costs by exploring strategic alternatives for its BioSteel business unit, which may involve selling the division.
"Canopy Growth has marked yet another major milestone in our transformation plan, as while BioSteel's business has shown significant year-over-year revenue growth, and we believe the brand remains an attractive asset, it does not align with Canopy Growth's cannabis-focused asset-light strategy," said David Klein, the company's CEO.
Klein is a speaker at the September Benzinga Cannabis Capital Conference in Chicago, where he'll likely discuss this news.
Why Is This Happening?
According to the company's earnings report, BioSteel's business represented roughly 60% of the company's first quarter FY2024 adjusted EBITDA loss.
What's Next
With BioSteel's operating loss and cash burn eliminated, Canopy reiterates its expectation to achieve positive Adjusted EBITDA across its remaining business units exiting FY2024.
CGC Price Action
Canopy’s shares traded 18.1035% up at $1.37 per share at the time of writing on Thursday.
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The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.
Photo: Courtesy of NikolayFrolochkin and ganjaspliffstoreuk by Pixabay
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