The Smiths Falls, Ont.-based company said Friday that the debut of its cannabis drinks will now be delayed because it requires more time to develop its beverage facility and “the scaling process is not complete.”
“In order to deliver products that meet our customer’s high standards we are electing to revise the launch date while we work through the final details,” Canopy chief executive David Klein said in a statement.
Canopy’s beverage business is expected to be a cornerstone for the company, which is behind the brands Tweed, Tokyo Smoke, Doja and Van der Pop. Canopy has said it is preparing to produce 13 cannabis-related beverages. The company has the backing of Constellation Brands Inc., a New York company which invested $5 billion in Canopy in 2019 and has a portfolio of brands including Corona beers, Robert Mondavi and Kim Crawford wines and premium spirits from SVEDKA Vodka and Casa Noble Tequila.
Canopy had expected to release its cannabis beverages in early January as part of Cannabis 2.0, where the country is allowing a second wave of products such as edibles, extracts and topicals to hit the market following the October 2018 legalization of cannabis in Canada
Cannabis-infused chocolates, cookies, soft chews, mints, tea and vapes were made available on the OntarioCannabis Store‘s website at 9 a.m. local time Thursday and were on sale the week before at physical retailers in the country.
Canopy did not say when it now intends to launch its beverages.
It submitted the final documentation for its beverage facility to Health Canada last June and received its license in late November.
The company’s statement said it does not believe the delay will have a material impact on its revenue for its 2020 financial year. It plans to provide an update on the beverages’ status when it releases its third-quarter results.
RBC Capital Markets analyst Douglas Miehm said in a note that he saw Canopy’s news in a “neutral light” and believes that engineering issues connected to the introduction of tetrahydrocannabinol — the psychoactive compound that gives users a high — emulsion syrup into other ingredients have “ultimately contributed to quality assurance shortfalls upon completion.”
“While the release is somewhat surprising, we do reaffirm our confidence in the company’s production capabilities and note that when it comes to beverages, Canopy remains ahead of the pack,” he said.
“In our view, the issues likely rest in translating the quality, taste, and consistency generated in a lab setting to large-scale commercial manufacturing.”