CGC stock is making gains today despite Canopy Growth (TSX:WEED) (NYSE:CGC) suffering continued setbacks in the launch of its cannabis-infused beverages range.
The world’s leading cannabis firm unveiled its range of cannabis-infused beverages back in October as it geared up for the rollout of the cannabis 2.0 market, including a product designed to be mixed with non-alcoholic beverages at home, and a sparkling drinks line designed by actor Seth Rogen. Canopy had been touting the prospect of infused beverages for over two years after Constellation Brands (NYSE:STZ) purchased a majority stake in the pot producer. However, CGC stock took a hit last month after the firm was forced to delay the launch of these new products.
While Canopy Growth first cited “scaling issues” as the cause for the delay, it is now being reported that the issue lies in the aluminum lining of the cans, which can attract emulsified droplets of active cannabis ingredients over time when pot beverages are under pressure, therefore making the drinks less effective when consumed. According to Yahoo Finance, Canopy had been aware of this issue as far back as last April, when CGC shares were at a peak valuation of around $70.00. Now, CGC stock trades for less than half that at $29.63.
It’s difficult to judge how big the infused-beverage market will be, or how much the delay will impact Canopy Growth, given the lack of products currently available to customers. Last month, Grand View Research forecast the global market for cannabis drinks would reach US$2.8 billion by 2025, growing at a compound annual rate of nearly 18%.
Newly appointed CEO David Klein is a 16-year veteran of the alcohol industry and said the issues arose when the company attempted to transition from lab development to commercial production but gave no solid launch date for a new launch. “If I could give a date that I felt good about, I would trip over myself to do it,” he said. “If I had to do it over again, I would have given ourselves a lot more wiggle room once we actually started producing at commercial scale.”
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