{"url_path":"/sec/cgc/10-k/2026/item-1","section_key":"item-1","section_title":"Item 1 Business.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-15","source_url":"https://www.sec.gov/Archives/edgar/data/1737927/0001193125-26-270260-index.html","accession_number":"0001193125-26-270260","cik":"0001737927","ticker":"CGC","issuer_name":"Canopy Growth Corp","edgar_url":"https://www.sec.gov/Archives/edgar/data/1737927/0001193125-26-270260-index.html","primary_entity_key":"0001737927","primary_entity_name":"Canopy Growth Corp"},"word_count":17314,"has_tables":true,"body_markdown":"Item 1. Business.\n\nOur Vision and Purpose\n\nWe are here to better lives through cannabis.\n\nWe believe in the power of a plant – not as a trend or commodity, but as a catalyst for elevating human potential. For the patient seeking to function more fully in their everyday lives, the veteran finding relief, and the individual rediscovering balance, clarity, and purpose. We believe that, with responsible enjoyment, cannabis can enrich experiences, deepen connection, and enhance well-being.\n\nCannabis is a global economic force in the making. We believe it will stand alongside – and eventually rival – the largest consumer packaged goods industries in the world. The companies that lead will not be those who move fastest, but those who are principled, disciplined, and focused on the consumer.\n\nGuided by these beliefs, we choose to lead the industry. We are making decisions for the long term, creating standards others will follow, and earning trust every day – with every product, interaction, and every commitment kept.\n\nWe are building a global, consumer-centric company with a clear and uncompromising ambition: to lead the world in bettering lives through cannabis. A company with brands and category-defining products that can scale globally, grounded in superior flower cultivation, driven by innovation across formats and technologies, and consistently delighting consumers. A company driven by focused and disciplined operators, relentless in execution, strategic prioritization, and financial performance.  Our foundation is built on four enduring values:\n\n•\nLeadership. We courageously set the standard for what this industry can and should be.\n\n•\nExcellence. We pursue uncompromising quality in everything we do – from cultivation to consumer experience.\n\n•\nTrust. We earn it through consistency, transparency, and integrity.\n\n•\nInnovation. We challenge assumptions and seek to unlock the full potential of cannabis as a plant and category.\n\nTogether, these values shape how we operate and create value, and how we better the lives of our people, and everyone we serve.\n\nThe full potential of cannabis is just beginning to be unlocked – and we intend to lead that future.\n\nOur Company\n\nCanopy Growth was incorporated pursuant to the Canada Business Corporations Act on August 5, 2009 and the Canopy Shares are listed and trade on both the TSX and The Nasdaq Global Select Market. We were among the first companies to be permitted to cultivate and sell legal cannabis in Canada. Today, Canopy Growth is a world-leading cannabis company which produces, distributes, and sells a diverse range of cannabis and cannabis-related products for adult-use and medical purposes under a portfolio of distinct brands in Canada pursuant to the Cannabis Act, SC 2018, c 16 (the “Cannabis Act”), and globally pursuant to applicable international legislation, regulations, and permits.\n\nWe supply high-quality cannabis products in Canada, Europe, and Australia, and hold a significant non-controlling, non-voting interest in Canopy USA, an entity that participates in the sale of cannabis products in the United States. Every market we operate in reflects the same uncompromising commitment: to better lives through cannabis – with consistency, quality, and trust at the center of everything we do. From cultivation to consumer experience, from product innovation to market execution, our decisions are designed to improve the lives of the people we serve.\n\nOur Brands\n\nWe are a leader in both the medical and adult-use cannabis markets in Canada, offering a broad and growing portfolio of brands and formats built to meet the needs of medical cannabis patients and adult-use consumers.\n\nOur medical platform is anchored by Spectrum Therapeutics in Canada and Canopy Medical in select international markets – brands built on the belief that patients deserve access to cannabis products held to the highest standards of safety, consistency, and efficacy. For adult-use cannabis, we maintain supply agreements across all Canadian provinces and territories and sell products through their established retail distribution systems. Using a consumer-driven approach, we offer a diverse portfolio of products designed for a wide range of occasions and experiences. Our distinct adult-use cannabis brands include Tweed® (“Tweed”), 7ACRES, Maitri, HiWay, Twd., Wana®, Claybourne™, DOJA, DeeLish, MTL Cannabis, LowKey, R’belle, and Deep Space.\n\nOur curated cannabis product formats include dried flower, pre-rolled joints (“PRJ”), oil, softgel capsules, edibles including gummies and vapes, as well as a wide range of cannabis accessories including our premier herbal vaporizer devices Storz & Bickel® (collectively with Storz & Bickel GmbH, “Storz & Bickel”).\n\n8\n\n \n\nOur Strategy and Outlook\n\nWe aspire to demonstrate how cannabis can be used to bettering lives and communities, and we have defined a clear strategy to bring this ambition to life. Our overall strategy is anchored in our commitment to building beloved consumer brands within an asset-right operating model, which focuses on driving efficiency for the greatest return on investment while owning the core capabilities that are critical to long-term sustainable success. We believe that this will enable us to compete more effectively, and lead, in today’s rapidly evolving market.\n\nTo achieve our vision, our strategy consists of six pillars:\n\n•\nWe are and expect to continue to be Canada’s #1 medical cannabis provider by revenue - We are committed to the high-quality production of medical cannabis products and are equally committed to helping medical professionals confidently prescribe and patients to responsibly use our products. As the leaders in providers of medical cannabis to patients in Canada, our award-winning network of clinics allows us to serve patients nationwide across the Apollo, Canada House and Abba Medix banners. We provide services that ensure the patient comes first by providing quick access to medical care to start their cannabis journey or helping medical cannabis patients seek reimbursement for their medicines. We are strong advocates for our patients and consistently seek to deliver products that are responsive to their needs.\n\n•\nLeadership of global vaporization through Storz &Bickel - Vaporization is a consumption method that aligns with the desires of many of our medical cannabis patients and adult-use consumers. With an already extensive product portfolio, our focus is to continue to push for more impactful product innovations that allow for the expansion of new product formats. Like our cannabis, these devices are crafted with the same attention to quality, performance and safety and undergo rigorous manufacturing procedures and certification. While already internationally established, Storz & Bickel is focused on addressing consumer needs in the North American market and intends to continue to deliver its award-winning products to a broader audience.\n\n•\nFocused growth in international medical cannabis market - Our unwavering commitment to the safety and effectiveness of our products is a critical strategic imperative which also helps differentiate us in the growing cannabis market. We deliver medical cannabis to patients in Germany, Poland, and Australia and expect to do so in the United Kingdom over the coming fiscal year. To remain successful, we consistently strive to make significant investments in our operations within Canada and Europe and we are well-positioned to pursue international growth opportunities with our strong medical cannabis brands and distribution networks. We intend to fuel the continued demand for our European Union Good Manufacturing Practices (“EU-GMP”) certified medical grade cannabis internationally with supply from within Europe and from our Canadian EU-GMP certified facility in Kincardine, Ontario. In addition, we will continue to maximize our existing routes to market to further our execution on our international growth plans, while leveraging our cannabis expertise and well-established medical brands.\n\n•\nFocusing on profitable scale in adult-use cannabis through our powerhouse brands backed by exceptional product quality - The heart of our business is in North America with our roots in Canada and investments in the U.S. Our brand portfolio includes Tweed, Claybourne™, HiWay, 7ACRES, Twd., Wana, DOJA, DeeLish, MTL Cannabis, LowKey, R’belle, and Deep Space in our Canadian adult-use market. As markets continue to evolve, we believe the role of brands will become more prominent in consumers’ desire for trustworthy products that deliver quality and consistency of experience. We are investing in our brands to further our position of leadership in the market and to continually strengthen their relationship with consumers. We understand that the success of our products and brands is only achievable with the support and buy-in of customers. As consumer needs and trends evolve, we are continuing to focus our efforts on product categories with the highest and most tangible profit opportunities that also align to customer needs and consumer desires. At the same time, we are significantly optimizing our wholesale capabilities to ensure that our products have the broadest distribution in our highest profit geographies.\n\n•\nLeveraging our disciplined “asset-right” model to build world class cultivation and to power our growth - As the cannabis market continues to rapidly evolve, we remain focused on driving efficiency for the greatest return on asset investments. With our acquisition of MTL Cannabis Corp. (“MTL”) completed in fiscal 2026, we have access to world leading genetics and talent that will shape our cultivation practices. Our objective is to excel at our own internal manufacturing capabilities by making selective investments in assets that will accelerate returns and secure long-term sustainable profitability. This means we will invest where necessary and continue to leverage local and/or regional suppliers for raw materials to complement our owned operations. We continually and consistently seek to optimize our operating footprint in order to achieve profitability and foster growth while retaining a steadfast commitment to the quality of our products and the integrity of our global supply chain.\n\n•\nUnparalleled exposure to the expanding U.S. cannabis market - Unlike other cannabis businesses, our investment in Canopy USA provides a unique opportunity to maximize the value of our previously-held conditional U.S. THC investments. We have an unconsolidated and non-controlling interest in Canopy USA which is, and is expected to continue to be, accounted for as an equity method (fair value) investment until such time as both the NASDAQ Stock\n\n9\n\n \n\nMarket and The New York Stock Exchange permit the listing of companies that consolidate the financial statements of entities that cultivate, distribute or possess marijuana (as defined in 21 U.S.C 802) in the United States for non-medicinal purposes (the “Stock Exchange Permissibility Date”). We continue to explore brand opportunities to continue building a foundation for us to participate indirectly in the world’s largest and fastest growing cannabis market and to offer our shareholders unique exposure to this market’s growth. See “Risk Factors – Our expansion plans into the United States rely upon the continued operations and success of Canopy USA and its subsidiaries and the anticipated benefits of the strategy involving Canopy USA is uncertain and may not be realized; and the fair value of our equity method investment in Canopy USA is volatile” under Item 1A of this Comprehensive Form 10-K.\n\nOur Brands and Products\n\nCannabis Products\n\nWe produce and sell a wide range of cannabis products, including dried cannabis flower, PRJ, extracts and concentrates, edibles including gummies and vapes in Canada and other locations where legally permissible to do so. Our cannabis products are sold both in the direct-to-patient markets for medicinal use, as well as in the adult-use market following the enactment of the Cannabis Act in Canada and the amendments thereto which provided for the legalization and regulation of cannabis products beyond cannabis flower and cannabis oils, to include products such as beverages, edibles including gummies and vapes (collectively, “Cannabis 2.0”). Our cannabis products are sold under a variety of brand names described under “Brand Portfolio” below and are intended to position us as a leader in both the medical and adult-use markets.\n\nOur cannabis products include:\n\n•\nDried Flower: We pride ourselves on growing high-quality cannabis, which is packaged for sale as dried flower and PRJ. We sell dried flower and PRJ in both the medical and adult-use markets. Dried flower continues to be the core of all cannabis markets globally and accordingly our focus on consistent high quality cultivation is relentless. Further, as the PRJ category gains further momentum based on the convenience of consumption for these products, we will continue to seek an active role in the category’s growth through non-infused and infused PRJ products.\n\n•\nExtracts and Concentrates: This category includes softgel capsules which offer a convenient, precise, and discrete dosing solution for those interested in consuming their cannabis in pill form and are available in a variety of concentrates, from micro to full doses. In addition to our historic experience in the softgel product category, which we feel is a competitive advantage, this category also represents a precise and low-cost consumption option for consumers while continuing to be attractive from a margin perspective for the Company. We also produce one of the leading brands of hash, a concentrated extract derived from the trichomes of the plant. Our hash has been a market leader, standing out among competitors because of its consistency, texture and potency sought out by more experienced cannabis consumers.\n\n•\nCannabis Edibles: This category includes a range of ingestible products including gummies. Current products offer a discreet and dosable cannabis experience and are available in a variety of flavors and sizes. We continue to view the edibles category as one of the major long term growth drivers within the cannabis industry.\n\n•\nCannabis Vapes: Our vapes are designed to bring effective and reliable technology to the vaping category. Our “510” vape concentrate cartridges and all-in-one vape devices are available in a variety of strains, with a range of THC and CBD levels. Our vapes are tamper-resistant, adhere to Health Canada’s regulations and we are continually reviewing and testing all inputs to ensure the highest quality and reliability of cannabinoids, terpenes and tamper-resistance features. Our vape cartridges are tested to the FDA standard for leachability to ensure the reduction of heavy metals and contaminants leaching into the extract. Our all-in-one vape products are produced using UL 8139 or equivalent Certified Safe Manufacturing standards which evaluate the safety of the integrated systems of a vape device and safety features and mechanisms that protect the user from harm when using the device. All of our vape battery cells are certified to UL 1642 or an equivalent safety standard.\n\nDevices and Delivery Technology\n\nIn addition to the vape pens and cartridge products that we offer in the legal cannabis market in Canada, through Storz & Bickel, we manufacture and sell medical cannabis and dry herb vaporizer devices. Storz & Bickel operates in an internationally certified facility dedicated to manufacturing medical devices. The certified medical vaporizers and dry herb vaporizers are exported to over 100 markets around the world. Storz & Bickel currently holds registrations to sell their medical devices Volcano Medic 2, and Mighty+ Medic in Australia, Canada, the European Union, Israel, Switzerland, and the United Kingdom and meet the country specific requirements including, but not limited to, electrical safety, biocompatibility, usability, as well as clinical performance and general safety. The Storz & Bickel dry herb vaporizers are crafted in the same facility and with the same attention to performance and safety as their medical devices and they undergo rigorous manufacturing procedures and are either TÜV Süd-certified or UL listed (UL8139).\n\n10\n\n \n\nOn September 9, 2025, Storz & Bickel launched the Veazy®, an accessible new addition to its premium portable vaporizer portfolio, extending the Company’s precision engineering to a broader audience. The Veazy is the first vaporizer from Storz & Bickel to be available in multiple colors that blend style with function—Charming Pink, Inspiring Orange, Dynamic Blue and Alluring Black.\n\nBrand Portfolio\n\nOur diverse brand portfolio enables us to effectively reach a broad spectrum of consumers for a variety of needs and occasions throughout their day – whether for adult-use or for medical purposes. Our product portfolio consists of Adult-Use Brands, Medical Brands, and Devices - as well as brands that we license from others, referred to as our “Affiliated Brands” below.\n\nAdult-Use Brands\n\nTweed is our flagship cannabis brand. Designed for everyday hardworking Canadians, Tweed offers dependable products across dried flower, pre-rolls, vapes, oils and softgels. Tweed’s familiar formats are made to fit seamlessly into any routine.\n\n \n\nDOJA is based in British Columbia’s picturesque Okanagan Valley, where DOJA’s premium, hand-crafted flower is grown. Born with a rebellious spirit and respect for the land, DOJA stays true to its West Coast roots proudly representing those “Of a Different Strain.”\n\n7ACRES is crafted by knowledgeable cannabis minds, who share a passion for the product. Every effort is made to ensure that each harvest is greater than the last and celebrated with true-to-plant aromas and flavours across flower, pre-rolls, infused pre-rolls, vapes and concentrates.\n\n \n\nDeeLish is the newest brand in our portfolio. A no-frills value brand built for everyday consumers, DeeLish offers everyday pricing and rotating genetics that keep the lineup fresh. Available in flower and pre-roll formats.\n\nDeep Space is an out-of-this-world brand. With high potency products and a bold brand presence, Deep Space is made for those who search for high impact experiences from infused pre-rolls and super sour edibles.\n\n \n\nMTL Cannabis is a symbol of authenticity, quality, and passion. Known for high-THC, terpene-rich indoor flower and precision-rolled pre-rolls, MTL Cannabis is built for discerning consumers who expect the very best. With award-winning genetics and hand-finished craftsmanship, MTL Cannabis represents the foundation of who we are: growers first, always focused on delivering consistent excellence.\n\nHiWay is a value brand that offers a variety of products at a convenient price point. From dried flower to pre-rolls, HiWay’s products have the trusted quality that our consumers rely on.\n\n \n\nLowKey by MTL Cannabis is approachable, fun, and designed for every moment. It’s cannabis for connection, creativity, and relaxation — without compromising on quality. By combining value-driven pricing with consistent indoor-grown products, LowKey gives more people access to cannabis they can trust, whether it’s flower, pre-rolls, or concentrates.\n\nMaitri is a Québec-exclusive brand focused on expertly-cultivated cannabis strains with high THC. Maitri is designed to bring the natural beauty of the province into your home.\n\n \n\nR’belle is a premium small-batch brand in Quebec, crafted for those who want something unique and elevated. With limited releases, exclusive genetics, and striking presentation, R’belle is cannabis designed to stand out. It’s where craft innovation meets consumer sophistication — bold, rebellious, and unforgettable.\n\nTwd. is a value brand with simple go-to offerings across flower, pre-rolls and oil.\n\n \n\n \n\n \n\n11\n\n \n\nMedical Brands\n\nSpectrum Therapeutics is our brand of medical cannabis products designed to optimize the therapeutic benefits of medical cannabis as prescribed by a medical practitioner. Branded products include cannabis oils, softgels and dried flower. Spectrum Therapeutics is also an e-commerce, multi-brand platform within the Canadian medical cannabis market.\n\n \n\nCanada House Clinics operates 13 clinic locations in seven provinces including both standalone and embedded locations inside third-party medical clinics, that are dedicated to helping clients on the front lines and serving veterans.\n\nCanopy Medical is a leading pharmaceutical manufacturer for the production, import and release of medical cannabis products in Europe. Canopy Medical is committed to developing and delivering world-class medical cannabis solutions for patients to improve their quality of life through innovative and high-quality products. Current medical cannabis formats sold within the Canopy Medical cannabis brand today include dried flower and oil extracts.\n\n \n\n \n\nApollo is an online medical cannabis clinic providing patients in Canada wide access to free, fully virtual medical cannabis consultations.\n\nAbba Medix is a veteran focused Canadian medical cannabis online distribution platform, primarily serving veterans.\n\n \n\n \n\n \n\nDevices\n\n \n\nAffiliated Brands\n\nStorz & Bickel\n\nBased in Tuttlingen, Germany, Storz & Bickel are designers and manufacturers of medically approved herbal vaporizer devices, most notably the Volcano Medic 2 and the Mighty+ Medic, Venty and Veazy.\n\n \n\nClaybourne™ is a California-based cannabis brand established in 2017, known for producing high-quality products with a focus on consistent, detail-oriented cultivation and processing.\n\n \n\n \n\n \n\nWana is an innovative edibles brand that is setting the standard through their thoughtfully crafted gluten-free, vegan recipe gummies. Wana is about making every ordinary day just a little more special.\n\nOur Operations\n\nCanadian Operations\n\nMedical\n\nUnder the Cannabis Act, license holders are able to sell medical cannabis through the mail to registered patients. Through the Spectrum Therapeutics and Abba Medix websites, patients who have registered with one of our Clinics (as defined below) are able to purchase products online and have them shipped directly to the address indicated on their registration document.\n\nWe have developed several programs to improve access to medical cannabis for authorized patients. First, we provide an income-tested compassionate pricing program whereby eligible low-income patients may obtain a discount on regular prices of medical cannabis through the Spectrum Therapeutics medical shop and on the Abba Medix online platform. We also have multiple offerings for veterans of the Canadian Armed Forces, including a team of customer care agents dedicated to assisting veterans with registration, ordering and insurance coverage; pre-approval and direct billing of Veterans Affairs Canada (“VAC”) to ensure uninterrupted access to medication as well as full coverage (through VAC) of all cannabis products offered in our online Spectrum Therapeutics and Abba Medix medical shops. Veterans do not have to pay out of pocket for any product; and can access special offers on our Storz & Bickel devices. For non-veterans, we also provide support through our customer care team to help patients identify if their medication is covered under the growing number of private health plans that have a medical cannabis component.\n\n12\n\n \n\nIn our effort to drive awareness of our products and services, we work closely with patient educators of specialty medical cannabis clinics and continue to hold community events (to the extent allowable within the regulatory environment) to build relationships and education on the offerings from Spectrum Therapeutics and Abba Medix.\n\nTogether, Abba Medix, Canada House and Apollo Cannabis Clinics (“Apollo”, and together with Canada House, our “Clinics”) provide Canada-wide access to free, fully virtual medical cannabis consultations – no referral required. Patients receive personalized treatment plans, ongoing education, and continuous support. To date, Apollo has helped thousands of Canadians manage a variety of general and complex medical conditions through evidence-based care. Our Apollo clinic has been named Best Medical Cannabis Clinic in the 2025 Toronto Star’s Readers’ Choice Awards, a public vote that reflects the trust patients place in Apollo’s care.\n\nAdult-Use\n\nOur cannabis cultivation operations are focused in three facilities, our hybrid greenhouse facility in Kincardine, Ontario, a second indoor facility in Pointe Claire, Quebec, and third facility in Louiseville, Quebec. We believe that the capacity from these facilities will collectively meet the current demand for dried flower across our entire house of brands both domestically and internationally. Further, the receipt of EU-GMP certification at the Kincardine facility enables us to continue exporting certified medical cannabis to medical markets in Europe and Australia.\n\nOur licensed operational capacity in Canada includes advanced manufacturing capability for oil and softgel encapsulation, PRJ (infused and non-infused) and hash production, which is primarily completed at our Smiths Falls, Ontario manufacturing facility. Through our in-house manufacturing capabilities of cannabis products, we can process and package bulk cannabis flower, whether internally or externally sourced, into high-quality cannabis flower products. Our remaining products are manufactured through an adaptive third-party sourcing model for all vapes, edibles and extracts. We are confident that our production and manufacturing capabilities and know-how are sufficient to meet the diverse needs of our adult-use and medical cannabis consumers in Canada.\n\nGlobal Operations\n\nIn recent years, the actions of governments around the world have signaled a significant change in attitudes towards cannabis and have either formally legalized medical cannabis access, or established government efforts to explore the legalization of medical cannabis access. Therefore, opportunities continue to exist for us to operate in jurisdictions where governments have established, or are actively moving towards, a legal framework. To support our continued push toward profitability, and to continue to seize growth opportunities in the global markets, we have reduced investment and concentrated our operational footprint in incubator markets in favor of using our resources to broaden partnerships in markets where we can operate via third parties with local expertise. Our purpose is to grow our global medical cannabis portfolio profitably. Our present market approach remains focused on supporting immediate revenue and establishing us as a leader in these markets, as permitted by local law and regulations.\n\nEurope\n\nCanopy Growth’s production and distribution facility in Europe is in Sankt Leon-Rot, Germany. Our Canopy Medical and Spectrum Therapeutics brands continue to serve this medical market with operations in Germany and Poland. In addition, the Tweed brand was successfully re-introduced into Germany in fiscal 2026. Our European medical cannabis business operates in accordance with the specific regulatory framework in place in the relevant jurisdictions, including supplying EU-GMP as applicable to medical cannabis products.\n\nIn addition to medical cannabis, our operations in Europe also include Storz & Bickel, the award-winning manufacturers of vaporizers and related accessories. The corporate offices and production facility of Storz & Bickel are located in Tuttlingen, Germany where we are focused on the production of the CRAFTY®, VENTY®, VEAZY®, PLENTY® and MIGHTY+® and the classic VOLCANO®.\n\nUnited States\n\nWe are not considered a U.S. Marijuana Issuer (as defined in the Canadian Securities Administrators Staff Notice 51-352 – Issuers with U.S. Marijuana-Related Activities (the “Staff Notice”)) nor do we have material ancillary involvement in the U.S. cannabis industry in accordance with the Staff Notice. While we have an investment in Canopy USA, which is a platform that is intended to enable such U.S.-based companies that may themselves participate in the U.S. cannabis market to operate, the transaction structure was intended to ensure that we do not violate the federal laws of the United States respecting cannabis and do not allow us to participate in cannabis activities in the United States or direct the activities of Canopy USA. Where a non-controlled affiliate has expressed an intent to enter the U.S. cannabis market, we have taken steps to insulate ourselves from all economic and voting interests. See “Business – Our Company – Canopy USA” and “Business – Government Regulation – U.S. Regulatory Framework” for further discussion.\n\n13\n\n \n\nAustralia and New Zealand\n\nEarly in fiscal 2018, we launched our Australian operations and Spectrum Therapeutics began selling medical cannabis to doctors prescribing its products. Spectrum Therapeutics continues to support Australian medical patients through imported products. Additionally, Storz & Bickel medical devices, notably the MIGHTY+ MEDIC®, is also available to patients in Australia. The MIGHTY+ MEDIC is listed on the Australian Register of Therapeutic Goods since 2019.\n\nFor medical devices to be legally supplied in New Zealand, they must be notified to the New Zealand Medicines and Medical Devices Safety Authority’s Web Assisted Notification of Devices (“WAND”) database. The Storz & Bickel medical devices have been notified to the WAND database.\n\nLoan Agreement\n\nOn January 8, 2026, the Company entered into a loan and guaranty agreement (the “Loan Agreement”), by and among the Company, as a borrower, certain subsidiaries of the Company party thereto, as borrowers and/or guarantors, the parties identified therein as lenders (the “Lenders”), and JGB Collateral LLC, as administrative and collateral agent (“JGB”), pursuant to which, among other things, the Lenders advanced US$150 million in cash pursuant to a senior secured term loan in the aggregate principal amount of approximately US$162.1 million (collectively, the “Loans”). The Loans were funded on January 8, 2026 (the “Loan Closing Date”) with an original issue discount of approximately US$12.1 million. The Loans mature on the earlier of (i) January 31, 2031, and (ii) the date that is 120 days prior to the maturity date of our outstanding senior unsecured convertible debentures with an aggregate principal amount of $55.0 million maturing on July 8, 2031.\n\nThe outstanding principal amount of the Loans bear interest at an annual rate equal to the applicable Term SOFR rate (subject to a minimum floor of 3.25%) plus 6.25%. Interest on the Loans will be paid monthly in arrears in cash. Following the first anniversary of the first interest payment date, each Lender will have the option to require the borrowers to repay such Lender its pro rata share of up to US$3.0 million of principal per calendar month on each payment date thereafter. Prepayment and repayment of the Loans will be subject to (i) an interest make-whole equal to 12 monthly interest payments less any payments made by the borrowers on account of interest prior to the date of such prepayment for any prepayments or repayments made during the first year of the Loans and (ii) an exit fee equal to approximately US$6.5 million, provided that, with respect to any partial prepayment or repayment of the Loans, only the pro rata portion of such exit fee will be payable at the time of each such partial payment. The Loans and obligations under the Loan Agreement and other related loan documents are secured by substantially all of the assets of the Company and each of its material subsidiaries.\n\nThe Loan Agreement also includes certain prepayment fees, a minimum unrestricted cash requirement of the lesser of US$90 million or the outstanding principal amount of the Loans, and various other representations, warranties, covenants and events of default customary for a financing of this nature.\n\nIn connection with the Loan Agreement, on the Loan Closing Date, the Company issued 18,705,578 common share purchase warrants of the Company (the “Loan Warrants”) to the Lenders in accordance with each Lender’s pro rata share of the Loans. Each Loan Warrant entitles the holder thereof to acquire one common share of the Company at an exercise price equal to US$1.30 per common share for a period of five years from the Loan Closing Date.\n\nA portion of the net proceeds from the Loans was used to repay all outstanding amounts owing under the Company’s previous first lien senior secured term loan facility (the “Credit Facility”).\n\nOn June 15, 2026, the Company amended the Loan Agreement pursuant to a first amendment to loan and guaranty agreement (the “Amendment”), by and among the Company, as a borrower, certain subsidiaries of the Company party thereto, as borrowers and/or guarantors, certain lenders party thereto, and JGB. Pursuant to the Amendment, the Lenders have, among other things, restricted (the “Exchange Restriction”) the Company’s and certain of its subsidiaries’ ability to exchange any Non-Voting Shares into Canopy USA Class B Shares (as defined below) at any time prior to the Stock Exchange Permissibility Date.\n\nATM Programs\n\nOn June 6, 2024, the Company established an at-the-market equity program that allowed it to issue and sell up to US$250 million of Canopy Shares to the public from time to time at the Company’s discretion (the “June 2024 ATM Program”) pursuant to an equity distribution agreement (the “2024 Equity Distribution Agreement”) entered into among the Company and BMO Nesbitt Burns Inc., as Canadian agent, and BMO Capital Markets Corp., as U.S. agent (together, the “Agents”).\n\nOn February 28, 2025, the Company established a new at-the-market equity program that allowed it to issue and sell up to US$200 million of Canopy Shares to the public from time to time at the Company’s discretion (the “February 2025 ATM Program”) pursuant to an equity distribution agreement (as amended, the “February 2025 Equity Distribution Agreement”) entered into among the Company and the Agents. The February 2025 Equity Distribution Agreement replaced the 2024 Equity Distribution Agreement. As of March 31, 2026, the February 2025 ATM Program has been completed.\n\n14\n\n \n\nOn August 29, 2025, the Company established a new at-the-market equity program that allows it to issue and sell up to US$200 million of Canopy Shares to the public from time to time at the Company’s discretion (the “August 2025 ATM Program”, and together with the June 2024 ATM Program and the February 2025 ATM Program, the “ATM Programs”) in concurrent public offerings in the United States (the “U.S. Offering”) and Canada; provided, however; that (i) sales of Canopy Shares in the August 2025 ATM Program in Canada is limited to aggregate gross sales proceeds to the Company of up to US$50 million (or its Canadian dollar equivalent) (the “Canadian Offering”); and (ii) in no event will the combined gross sales proceeds of the August 2025 ATM Program in the United States and Canada exceed US$200 million. The Company established the August 2025 ATM Program pursuant to an equity distribution agreement (the “August 2025 Equity Distribution Agreement”) entered into among the Company and the Agents.\n\nThe August 2025 ATM Program will be effective until the earlier of (A) June 5, 2027; (B) the issuance and sale of Canopy Shares having an aggregate offering price of US$200 million on the terms and subject to the conditions set forth in the August 2025 Equity Distribution Agreement; (C) the date on which the Company’s registration statement, as amended, filed with the SEC (the “Registration Statement”) has ceased to be useable for sales of Shelf Securities (as defined in the August 2025 Equity Distribution Agreement) pursuant to General Instruction I.B.1 of Form S-3; (D) the date on which the Company receives notice from the SEC that the Registration Statement has ceased to be effective; and (E) the date on which the August 2025 Equity Distribution Agreement is terminated by the parties. Notwithstanding the foregoing, the Canadian Offering will automatically terminate on the earlier of (i) July 5, 2026; (ii) the date on which the issuance and sale of Canopy Shares in the Canadian Offering equals US$50 million (or its Canadian dollar equivalent); (iii) the date on which the Company receives notice from the Ontario Securities Commission that the Company’s Canadian short form base shelf prospectus dated June 5, 2024 has ceased to be effective; or (iv) the date on which the August 2025 Equity Distribution Agreement is terminated pursuant to clauses (A) through (E) above; provided, however, that a termination of the Canadian Offering as contemplated by clauses (i), (ii) and (iii) above will in no case affect the U.S. Offering and the August 2025 Equity Distribution Agreement will continue in full force and effect with respect to the U.S. Offering. The August 2025 Equity Distribution Agreement replaced the February 2025 Equity Distribution Agreement.\n\nDuring the fiscal year ended March 31, 2026, the Company sold 127,505,498 Canopy Shares for gross proceeds of approximately $238.4 million (US$173.3 million) under the February 2025 ATM Program and 56,206,101 Canopy Shares for gross proceeds of approximately $135.8 million (US$98.0 million) under the August 2025 ATM Program. As of June 11, 2026, we can issue and sell up to US$102.0 million of Canopy Shares under the August 2025 ATM Program.\n\nAcquisition of MTL\n\nOn December 14, 2025, we entered into an arrangement agreement, as amended on January 6, 2026 with MTL, pursuant to which, among other things, we agreed to acquire all of the issued and outstanding common shares in the capital of MTL (the “MTL Shares”) in accordance with a plan of arrangement under the Canada Business Corporations Act (the “MTL Arrangement”). Pursuant to the terms of the MTL Arrangement, shareholders of MTL received 0.32 of a Canopy Share and $0.144 in cash (the “Cash Consideration”) for each MTL Share held immediately prior to the closing of the MTL Arrangement.\n\nIn connection with the MTL Arrangement:\n\n•\neach outstanding warrant to purchase MTL Shares that was out-of-the-money (each, a “MTL Warrant”) was exchanged for a replacement warrant (a “Replacement Warrant”) to acquire from Canopy Growth the number of Canopy Shares as is equal to (a) the number of MTL Shares issuable on the exercise of such MTL Warrant immediately prior to the effective time of the MTL Arrangement (the “Effective Time”), multiplied by (b) 0.32. The exercise price per Canopy Share subject to any such Replacement Warrants is equal to the price per Canopy Share that was otherwise payable to acquire a MTL Share pursuant to the MTL Warrant it replaced less an amount equal to the Cash Consideration;\n\n•\neach outstanding option to purchase MTL Shares that was out-of-the-money (each, a “MTL Option”) was exchanged for a replacement option (a “Replacement Option”) to acquire from Canopy Growth the number of Canopy Shares as is equal to (a) the number of MTL Shares issuable on exercise of such MTL Option immediately prior to the Effective Time, multiplied by (b) 0.32. The exercise price per Canopy Share subject to any such Replacement Option is equal to the price per Canopy Share that was otherwise payable to acquire a MTL Share pursuant to the MTL Option it replaced less an amount equal to the Cash Consideration; and\n\n•\neach outstanding compensation option (collectively, “MTL Compensation Options”) to purchase units of MTL (the “MTL Units”) was exchanged for a compensation option (a “Replacement Compensation Option”) to acquire from Canopy Growth the number of units (the “Canopy Units”) as is equal to (a) the number of MTL Units that were issuable on exercise of such MTL Compensation Option immediately prior to the Effective Time, multiplied by (b) 0.32. The exercise price per Canopy Unit subject to any such Replacement Compensation Option is equal to the price per Canopy Unit that was otherwise payable to acquire a MTL Unit pursuant to the MTL Compensation Option it replaced less an amount equal to the Cash Consideration. Each Canopy Unit is comprised of one Canopy Share and one half of one Canopy Growth warrant (each whole warrant, a “Canopy Unit Warrant”), with each Canopy Unit Warrant exercisable to acquire one\n\n15\n\n \n\nCanopy Share until September 19, 2028 at an exercise price of C$2.61 per Canopy Share, subject to adjustment in accordance with its terms.\n\nOn March 16, 2026, we completed the acquisition of MTL and now own 100% of the issued and outstanding MTL Shares.\n\nIn aggregate, upon closing of the transaction, we issued 41,232,337 Canopy Shares and made a cash payment of $18.5 million pursuant to the MTL Arrangement as consideration to the shareholders of MTL for the MTL Shares. In addition, 2,956,391 Canopy Shares were issued under the MTL Arrangement to certain former shareholders (the “MC Shareholders”) of Montreal Cannabis Medical, Inc. (“MC”) in exchange for a release of all prior obligations owing to the former MC Shareholders in connection with MTL’s prior acquisition of MC. The Canopy Shares issued to the MC Shareholders are subject to an 18-month restriction on transfer. The Company also issued 7,446,919 Replacement Warrants, 160,000 Replacement Options and 70,515 Replacement Compensation Options.\n\nGovernment Contracts\n\nIn Canada, we sell cannabis and cannabis products to cannabis control authorities in all of the provinces and territories in Canada (other than Saskatchewan which does not have a central cannabis control authority), where each such cannabis control authority is the sole wholesale distributor and in certain provinces, the sole retailer, of cannabis and cannabis products in the relevant province. We sell these products to the various cannabis control authorities under supply agreements that are subject to terms that allow for renegotiation of sale prices and termination at the election of the applicable cannabis control authority. In particular, the cannabis control authorities may in the future choose to stop purchasing our products, may change the prices at which they purchase our products, may require that we provide them with the lowest purchase price in line with what we offer another third-party, may return our products to us at any time and, in certain circumstances, may cancel purchase orders at any time including after products have been shipped. For the year ended March 31, 2026, we had approximately $130.2 million in gross sales to cannabis control authorities and no cannabis control authority accounted for 10% or more of our net consolidated revenue.\n\nIntellectual Property and Product Safety\n\nIntellectual Property\n\nThe proprietary nature of, and protection for, our products, technologies and processes are important to our business. We rely on a combination of trademarks and know-how with a limited portfolio of patents (utility and design), to protect our intellectual property. The duration of the protection afforded by our registered intellectual property varies by the nature of the registration, but we manage renewals and notices on an on-going basis to ensure that our intellectual property is protected in line with our strategic focus under applicable law in various jurisdictions.\n\nProduct Safety and Pharmacovigilance\n\nIn the interest of patient safety and good pharmacovigilance practices, we have continued to maintain a unique global pharmacovigilance and product safety program to capture, document and evaluate adverse events reported from the worldwide use of our medical cannabis products and our various Canadian adult-use cannabis brands, as well as products sold by Storz & Bickel.\n\nPharmacovigilance, also known as drug safety, is the science and activities relating to the detection, assessment, understanding and prevention of adverse effects or any other drug-related problems. Our regulatory affairs team works to ensure that new products are developed with consumer safety in mind.\n\nThe global pharmacovigilance program ensures that all employees are trained on how to identify and report adverse events. Data collected from various sources (including, but not limited to, spontaneous reporting, clinical trials, literature and health authorities’ databases) are processed and analyzed in a centralized global safety database by our regulatory affairs team, in compliance with global and local regulatory requirements.\n\nCollected data is then used to perform signal detection activities and prepare periodic aggregate safety reports to evaluate the benefit-risk profile of our products.\n\nGovernment Regulation\n\nCanadian Regulatory Framework\n\nOn October 17, 2018, the Cannabis Regulations under the Cannabis Act came into force (the “Cannabis Regulations”). The Cannabis Regulations set out several classes of licenses that authorized activities in relation to cannabis, including:\n\n•\na license for cultivation;\n\n•\na license for processing;\n\n•\na license for analytical testing;\n\n•\na license for sale for medical purposes;\n\n•\na license for research; and\n\n16\n\n \n\n•\na cannabis drug license.\n\nPrior to October 17, 2018, cannabis was governed by the Controlled Drug and Substances Act (Canada) (“CDSA”). Under the CDSA, the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) set out a framework to provide individuals with access to cannabis for medical purposes and was the governing legislation in respect of the production, sale and distribution of medical cannabis and related oil extracts in Canada. Although the ACMPR were repealed, the regulatory framework applicable to cannabis for medical purposes was substantially reproduced within the Cannabis Act with minimal changes.\n\nPursuant to the transitional provisions outlined in the Cannabis Act, we transitioned all licenses held under the ACMPR regulatory framework to the new Cannabis Act; therefore, all licenses remain active due to the regulatory change that occurred on October 17, 2018.\n\nAt the end of each term of their respective licenses, a license holder must submit an application for renewal to Health Canada containing information prescribed by the Cannabis Act.\n\nThe Cannabis Act legalized adult-use cannabis use nationwide in Canada. It creates a legal framework for controlling the production, distribution, sale and possession of cannabis across Canada for both medical and adult-use purposes. Subject to provincial or territorial restrictions, adults who are 18 years of age or older are legally able to:\n\n•\npossess up to 30 grams of legal cannabis, dried or equivalent in non-dried form in public;\n\n•\nshare up to 30 grams of legal cannabis, dried or equivalent in non-dried form with other adults;\n\n•\nbuy dried or fresh cannabis and cannabis oil from a provincially licensed retailer;\n\n•\ngrow, from licensed seed or seedlings, up to four cannabis plants per residence for personal use; and\n\n•\nmake cannabis products, such as food and drinks, at home as long as dangerous organic solvents are not used to create concentrated products.\n\nIn the initial stage of the regulated adult-use cannabis market, products available for sale were the same as those permitted in the medical cannabis market (dried flowers, oils and softgels and dried cannabis products). On October 17, 2019, the second phase of adult-use cannabis products, specifically, edible cannabis products, cannabis extracts, and cannabis topical products, were legalized pursuant to certain amendments to the regulations under the Cannabis Act. Edible cannabis products, cannabis extracts, and cannabis topical products, which are now available for sale, are subject to additional regulatory requirements that include supplemental marketing and advertising rules, further restrictions on labelling and packaging, rules relating to ingredients of edible cannabis products and cannabis extracts, limits on THC content, and added production facility requirements.\n\nFurther, the current regime for medical cannabis will continue to allow access to cannabis to people who have the authorization of their healthcare provider.\n\nUnder the Cannabis Act, license holders are permitted to sell and distribute medical cannabis through the mail to registered patients. The Cannabis Act also provides provincial and municipal governments with the authority to prescribe regulations regarding retail and distribution of adult-use cannabis, as well as the ability to alter some of the existing baseline requirements, such as increasing the minimum age for purchase and consumption. As the distribution and sale of cannabis for adult-use purposes is regulated under the individual authority of each provincial and territorial government, regulatory regimes vary from jurisdiction to jurisdiction. In each of the provinces and territories, except for Saskatchewan, a provincial distributor is responsible for purchasing cannabis from producers and selling products to its regulated retail distribution channels.\n\nThe Cannabis Act also includes several measures to help prevent youth from accessing cannabis, including both age restrictions and restrictions on the promotion of cannabis.\n\nThe Cannabis Act discourages youth cannabis use by prohibiting products that are appealing to youth, packaging or labeling cannabis in a way that makes it appealing to youth, selling cannabis through self-service displays or vending machines, or promoting cannabis, except in narrow circumstances, where young people cannot see the promotion. The new legislation also helps protect public health by creating strict safety and quality regulations.\n\nIn connection with the framework for regulating cannabis in Canada, the Canadian federal government introduced corresponding penalties under the Criminal Code (Canada), including penalties for the illegal sale of cannabis, possession of cannabis over the prescribed limit, production of cannabis beyond personal cultivation limits, taking cannabis across the Canadian border, giving or selling cannabis to a youth and involving a youth to commit a cannabis-related offense.\n\nFollowing extensive engagement with stakeholders, universities, researchers, health authorities, cannabis industry associations, cannabis license holders, provinces, territories and the public, the Canadian federal government announced the following amendments to the Cannabis Act and its regulations:\n\n•\nAn increase in the public possession limit for cannabis beverages to a level that is similar to other forms of cannabis, such as solid edible cannabis products (i.e. gummies or chocolate). Adults in Canada are now able to possess up to 17.1 liters (equal to 48 cans of 355 ml each) of cannabis beverages in public for non-medical purposes, which is up from\n\n17\n\n \n\napproximately 2.1 liters (equal to five cans of 355 ml each) under the previous rules. Existing controls that mitigate the risks of overconsumption and accidental consumption, such as child-resistant packaging and strict limits on the amount of THC per container, remain in place;\n\n•\nChanging how the Canadian federal government regulates non-therapeutic cannabis research with human participants, helping make the process of conducting this research easier, while still maintaining appropriate public health and safety controls;\n\n•\nAllowing for analytical testing license holders and federal and provincial government laboratories to produce, distribute and sell reference standards and test kits, to increase access to cannabis testing materials and thereby support access to a quality-controlled supply of cannabis; and\n\n•\nBroadening the educational qualifications for the Head of Laboratory, a position that is required for an analytical testing license and is responsible for all cannabis testing activities that occur at the licensed site.\n\n \n\nIn December 2023, Health Canada released guidance on cannabis products deliberately made with intoxicating cannabinoids other than delta-9-THC. Health Canada defines “intoxicating cannabinoids” as cannabinoids that bind to and activate the CB1 receptor and the guidance includes a list that currently sets out 9 cannabinoids that qualify, however, that list is subject to Health Canada’s discretion to revise this list as new evidence becomes available about any of the current listed cannabinoids or any other potential intoxicating cannabinoids. This guidance recommends that license holders apply the regulatory controls (including limits on the amount of cannabinoids in certain products) currently applicable to delta-9-THC to all other cannabinoids that Health Canada considers to be “intoxicating cannabinoids” in order to minimize the risks of accidental consumption, overconsumption and adverse effects. This guidance comes at a time when various provincial regulators (such as those in Ontario, British Columbia and Alberta) are actively evaluating whether to permit the sale of or how to evaluate limits on the levels of certain cannabinoids (such as tetrahydrocannabivarin and cannabinol).\n\nOn March 12, 2025, the Regulations amending certain regulations concerning cannabis (streamlining of requirements) and the Order Amending Schedule 2 to the Cannabis Act came into force. These amendments are intended to reduce regulatory burden and support diversity and competition in the legal cannabis market while maintaining the public health and public safety objectives of the Cannabis Act.\n\nThe amendments include the following:\n\n•\nChanges to the scope and presence of security clearance holders with respect to onsite monitoring of activities and destruction of cannabis;\n\n•\nCreation of new waste categories and simplification of destruction records;\n\n•\nNo longer requiring the distribution of “consumer leaflets” to accompany the sale of adult use cannabis in provinces. However, a package insert or leaflet may be included in the packaging of a product;\n\n•\nSimplification of the import/export permits and records, the package on dates and the shipment of cannabis both domestically and internationally;\n\n•\nPermission to have as many alternate Quality Assurance Persons (“QAPs”) that are required to need to support the business, with clear detail denoting the tasks to be personally performed by the QAP;\n\n•\nIncreased capacity thresholds to be eligible for micro cultivation, nursery and micro-processing licenses;\n\n•\nSimplification of the security measures including intrusion detection, secure storage, and motion detection in areas where cannabis is being handled and processed;\n\n•\nPackaging simplification to the immediate container for all classes of cannabis products except cannabis seeds;\n\n•\nRemoval of the requirement to submit a notice of new cannabis product for dried and fresh cannabis products;\n\n•\nCultivation license holders may sell pollen to other license holders;\n\n•\nHealth Canada being granted authority to suspend licenses for contravention of the Cannabis Fees Order;\n\n•\nDerivatives may now be produced, exported, sold and processed from plant parts exempted under the Cannabis Act without a license;\n\n•\nPre-rolled dried cannabis no longer has a weight limit (formerly 1g);\n\n•\nEthyl alcohol (up to 10mg per activation) may be used in cannabis extracts intended for inhalation and denatured alcohol many now be used in cannabis topicals;\n\n•\nSeveral consumer-focused changes to packaging and labelling requirements, including:\n\no\nDried cannabis equivalency statement no longer required on the label;\n\no\nCannabis health warning messages on the label now vary based on the product class and route of ingestion;\n\no\nRemoval of the requirement to list the THC and CBD quantities on the label, only total THC and total CBD required;\n\no\nCo-packing for cannabis (dried, fresh, extracts, topicals and edibles) permitted with restrictions on properties and weight of cannabis and THC;\n\no\nWrapper (if used) on the outer container can now list more than just the THC Symbol;\n\n18\n\n \n\no\nDried cannabis products may have transparent packaging or packaging with cut-outs;\n\no\nThe container and lid/cap can be a different color;\n\no\nPermission to use other images and information on wrappers if required by another act or regulation; and\n\no\nPermission to include product counterfeiting measures such as a barcode or quick response (QR) code; and\n\n•\nRemoving the requirements to file the annual reports of promotional expenses and activities and key investor reports for license holders who are wholly owned by publicly traded entities.\n\nBeyond medical cannabis sales, the Cannabis Act does not govern the retail sales of cannabis in the adult-use market. Retail sales of cannabis are governed by provincial legislation which contemplates the sale and distribution of cannabis to adult use customers. The provincial and territorial regulations in Prince Edward Island, Nova Scotia (with limited exceptions for certain\nMi’kmaw communities) and Quebec allow only for government-run cannabis stores, while the provincial and territorial regulations in Ontario, Alberta, Newfoundland and Labrador, Nunavut, Yukon, Northwest Territories, Saskatchewan and Manitoba leave the retail sale of cannabis to the private sector. In New Brunswick and British Columbia, provincial and territorial regulations allow for a hybrid model in which both public and private stores can operate. In addition, in Ontario, British Columbia, New Brunswick, Nova Scotia, Newfoundland and Labrador, Northwest Territories, Yukon, Prince Edward Island and Quebec, the provincial body is solely responsible for online sales.\n\nEuropean Union Regulatory Framework\n\nWhile each country in the European Union (“EU”) has its own laws and regulations, many common practices are being adopted relative to the developing and growing medicinal cannabis market. For example, to ensure quality and safe products for patients, many EU countries only permit the import and sale of medical cannabis from EU-GMP certified manufacturers.\n\nThe EU requires adherence to EU-GMP standards for the manufacture of active substances and medicinal products, including cannabis products for medicinal purposes. Therefore, a system for certification of EU-GMP has been implemented, which allows the local competent authority under the law of the respective EU member state to conduct inspections of manufacturing sites and, if the strict EU-GMP standards are met, to issue a certificate of EU-GMP compliance that is also accepted in other EU member countries.\n\nAs of April 1, 2024, the Law on the Controlled Use of Cannabis (Gesetz zum kontrollierten Umgang mit Cannabis, “Cannabis Law”) has led to the partial legalization of non-medicinal cannabis and a regulatory reform of cannabis for medicinal purposes in Germany. In terms of cannabis for medicinal purposes the Medicinal Cannabis Law (Medizinalcannabis-Gesetz), which is part of the Cannabis Law, works in unison with existing pharmaceutical laws and regulations in Europe. For example, the Medicinal Cannabis Law still requires that all cannabis for medicinal purposes must be EU-GMP certified, sold by EU-GMP certified manufacturers and prescribed by a physician. The Cannabis Law also permits the use of non-medicinal cannabis in Germany to a limited extent and its cultivation at home or together in so-called cannabis social clubs, the details of which are set out in the Recreational Cannabis Law (Konsumcannabis-Gesetz). Import of non-medicinal cannabis is not permitted in Germany. Although cannabis as of April 1, 2024 is no longer classified as a narcotic, regardless of whether for medicinal or non-medicinal purposes, cannabis remains a licensed and controlled use product in Germany.\n\nThe government of Germany has proposed to tighten the Medicinal Cannabis Law. There is a draft bill from the German Federal Government dated December 3, 2025 (docket no. 21/3061), which was debated in the German Bundestag at its first reading on December 18, 2025. In particular, discussions are focusing on a possible ban on the postal delivery of medicinal cannabis, as well as a requirement for cannabis patients to visit a local doctor’s office regularly, for example once a year. It is unclear whether and/or when these proposals will be turned into law.\n\nThe government of Germany presented a further draft bill aimed at stabilizing contributions to statutory health insurance (Entwurf eines Gesetzes zur Stabilisierung der Beitragssätze in der gesetzlichen Krankenversicherung). Under this proposal, reimbursement entitlements for treatment with medicinal cannabis will, in the future, be restricted to treatment with standardized-quality extracts and medicinal products containing the active ingredients dronabinol and nabilone. Consequently, the costs of treatment with cannabis flowers will no longer be reimbursed by statutory health insurance. This draft bill has not yet been debated in the German Parliament (Bundestag) and the impact of this legislation on the Company’s operations and cash flow, if adopted is expected to be limited.\n\nAustralia Regulatory Framework\n\nMedicinal cannabis was federally legalized in Australia in 2016 under the Therapeutic Goods Act 1989 (Cth) (the “Act”). While adult-use cannabis is not currently permissible in Australia, the Australian Capital Territory has decriminalized the adult possession of up to 50 grams of dried cannabis in public and 150 grams of fresh cannabis. However, selling, supplying, or sharing cannabis remains illegal without federal licensing. The Office of Drug Control grants licenses for the cultivation, production, and manufacture of cannabis for medicinal and scientific reasons in accordance with the Narcotic Drugs Act 1967 (Cth). The majority of medicinal cannabis products prescribed in Australia are done pursuant to the authority of Therapeutic Goods Administration (“TGA”) under the Therapeutics Goods Act (1989). In addition, the Office of Drug Control manages import and export regulations, including\n\n19\n\n \n\nissuing permits for medicinal cannabis. We hold the licensing for the registration of our cannabis products as well as the necessary permissions for the import and distribution of sale of medical cannabis in Australia.\n\nWith respect to the sale of vaporizers in Australia, the regulations have changed since implementation. On March 1, 2024 the importation of all non-therapeutic vapes or personal importation of all vapes became prohibited by the TGA. Our Storz & Bickel vapes, namely the VOLCANO MEDIC 2 and MIGHTY+ MEDIC, are registered as a medical device with the TGA and therefore is not subject to the limitations imposed by the ban (but still requires import permits or notice as required under the Act).\n\nAs therapeutic vapes, the Storz & Bickel devices may still be lawfully supplied by pharmacists and physicians in Australia to patients, provided those vapes continue to meet the relevant applicable regulatory standards set forth by the TGA.\n\nU.S. Regulatory Framework\n\nForty-one states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, and Northern Mariana have passed legislation or legalized some form of cannabis use for certain medical purposes. Twenty-four of those states, the District of Columbia, Guam, and Northern Mariana, have also legalized cannabis for adults for non-medical purposes (sometimes referred to as adult or recreational use). Eight additional states have legalized forms of low-potency cannabis for select medical conditions. Only three states continue to prohibit cannabis entirely, although one of those states has decriminalized possession of small amounts, leaving only Idaho and Kansas with complete criminalization. Prior to a Final Order announced by the U.S. Department of Justice (the “DOJ”) on April 23, 2026, cannabis other than “hemp,” as defined in statute, was categorized as a Schedule I controlled substance under the Controlled Substances Act (21 U.S.C. § 811) (the “CSA”), making it illegal under federal law in the U.S. to cultivate, distribute, or possess cannabis without the relevant registrations. The DOJ Final Order placed FDA approved products and products containing cannabis subject to a qualifying state-issued license for medical use in Schedule III of the CSA. The DOJ also announced a new hearing process to continue the process to fully remove marijuana from Schedule I to Schedule III. The hearing will begin on June 29, 2026.\n\nDespite the recent U.S. federal government actions, which are subject to legal challenge, there remain conflicting views between state legislatures and the U.S. federal government regarding cannabis, the legality of investment in cannabis businesses in the U.S. is not fully settled and there can be no assurances that federal or state authorities will consider such investments to be compliant with applicable law and regulations.\n\nThe response to this inconsistency was first addressed in August 2013 when then Deputy Attorney General James Cole authored a memorandum (the “Cole Memorandum”), noting that in jurisdictions that have enacted laws legalizing cannabis in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations is less likely to be a priority at the federal level.\n\nIn light of limited investigative and prosecutorial resources, the Cole Memorandum concluded that the DOJ should be focused on addressing only the most significant threats related to cannabis. The Cole Memorandum was later rescinded by U.S. Attorney General Jeff Sessions under the Trump Administration. Despite this rescission, the DOJ has not prioritized the enforcement of the CSA’s prohibition on cannabis against cannabis companies complying with the state law and their vendors for over nine years.\n\nOn March 11, 2021, Merrick Garland was appointed as U.S. Attorney General. At his confirmation hearing, he said, “It does not seem to me a useful use of limited resources that we have, to be pursuing prosecutions in states that have legalized and that are regulating the use of marijuana, either medically or otherwise.” In April 2022, Attorney General Garland reiterated that prosecuting the possession of cannabis is “not an efficient use” of federal resources, especially “given the ongoing opioid and methamphetamine epidemics” facing the nation. In March 2023, Attorney General Merrick Garland testified in a Congressional hearing that the DOJ was continuing its work on a new memorandum regarding cannabis enforcement. Garland stated that the policy will be “very close to what was done in the Cole memorandum” but was yet to be finalized.\n\nIn the 2024 Consolidated Appropriations Act, Congress included a provision, known as the Joyce Amendment (previously the Rohrabacher-Farr Amendment) which prohibited the DOJ from spending funds to interfere with the implementation of state medical cannabis laws until September 30, 2024. The amendment, which had been renewed every year since 2015, has not been extended past its 2024 expiration.\n\nIn February 2014, the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Treasury Department issued a memorandum on Bank Secrecy Act (“BSA”) Expectations Regarding Marijuana-Related Businesses (the “FinCEN Marijuana-Related Guidance”) providing instructions to banks seeking to provide services to cannabis-related businesses. The FinCEN Marijuana-Related Guidance states that in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of federal money laundering laws. Despite this guidance, under U.S. federal law it may, under certain circumstances, be a violation of federal money laundering statutes for financial institutions to accept any proceeds from cannabis sales or any other Schedule I controlled substances. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to U.S. cannabis businesses. Under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan or any other service could be found guilty of money laundering or conspiracy. Due to this uncertainty, many U.S. banks and certain Canadian banks are\n\n20\n\n \n\nreluctant to transact business with U.S. cannabis companies. While the federal government has not initiated financial crimes prosecutions against state-law compliant cannabis companies or their vendors, the government theoretically could. Further, while the FinCEN Marijuana-Related Guidance is presumptively still in effect, FinCEN could elect to rescind the FinCEN Marijuana-Related Guidance at any time.\n\nFinCEN, along with other federal banking regulators, released an interagency statement on Providing Financial Services to Customers Engaged in Hemp-Related Businesses in December 2019 (“FinCEN Hemp Statement”). In June 2020, FinCEN issued further guidance regarding Due Diligence Requirements under the BSA for Hemp-Related Business Customers (“FinCEN Hemp Guidance”). The FinCEN Hemp Statement and FinCEN Hemp Guidance provided financial institutions with anti-money laundering risk considerations for hemp-related businesses to ultimately enhance the availability of financial services for, and the financial transparency of, hemp-related businesses in compliance with federal law. The FinCEN Hemp Statement and FinCEN Hemp Guidance do not replace or supersede the FinCEN Marijuana-Related Guidance. To date, there have been no revisions to this guidance reflecting the recent DOJ Final Order rescheduling of certain medical cannabis products.\n\nIn 2022, President Biden signed into law the “Medical Marijuana and Cannabidiol Research Expansion Act,” a bipartisan bill aimed at easing restrictions on cannabis research, and the first standalone cannabis reform bill to pass both the House and Senate. Additionally, on October 6, 2022, President Biden issued a presidential proclamation pardoning federal convictions for simple marijuana possession offenses, encouraging state governors to do the same on the state level where permissible, and requesting that the Secretary of Health and Human Services and the Attorney General initiate an administrative process to review cannabis’s Schedule I classification under the CSA. In response to this directive, the U.S. Department of Health and Human Services (the “HHS”) issued a letter to the DEA on August 29, 2023, recommending that cannabis be reclassified as a Schedule III drug under the CSA. President Biden issued an additional proclamation on December 22, 2023 further expanding the list of pardoned offenses under federal law related to marijuana possession.\n\nOn May 16, 2024, the DEA issued a proposed rule to reclassify marijuana from its current classification as a Schedule I drug to a Schedule III drug. The CSA provides that substances in Schedule III have a moderate to low potential for physical and psychological dependence and reclassification of marijuana from a Schedule I to a Schedule III drug would thereby loosen certain DEA restrictions. Nonetheless, the DEA has made clear that if reclassification were to take place, the “regulatory controls applicable to Schedule III controlled substances would apply” which includes controls related to the manufacture, distribution, dispensing, and possession of marijuana. Of note, the proposed rule applies only to marijuana as defined in the CSA, i.e., limited to the plant and derivatives of the plant. The proposed rule did not therefore apply to synthetically derived THC or hemp as it is defined by the CSA. The comment period to the proposed rule lasted 60 days from its publication in the Federal Register, which was on May 21, 2024. The comment period ended on July 22, 2024, yet the formal rulemaking process remains ongoing.  In a Final Order announced April 23, 2026, the DOJ placed FDA approved products containing marijuana and marijuana products regulated by a state medical marijuana license in Schedule III of the CSA.  The DEA also stated in the April 23, 2026 announcement that the DEA is withdrawing notice of the prior hearing and will hold a new administrative hearing starting on June 29, 2026 to consider the broader rescheduling of marijuana from Schedule I to Schedule III. The DOJ actions do not change the status of any cannabis products under the Federal Food, Drug, and Cosmetic Act, which is implemented by the FDA. To date, all FDA approved products containing cannabis are prescription drugs, approved through the FDA drug approval process.\n\nThe recent DOJ actions were taken in accordance with the December 2025 President Trump executive order (the “Executive Order”) directing the U.S. Attorney General to expedite the completion of the administrative process to reschedule marijuana from Schedule I to Schedule III.\n\nMultiple legislative reforms related to cannabis and cannabis-related banking have been proposed by the federal government in the United States. Examples include the States Reform Act; the Cannabis Administration and Opportunity Act; the Marijuana Opportunity, Reinvestment and Expungement Act; the Secure and Fair Enforcement Regulation (“SAFER”) Banking Act; the Capital Lending and Investment for Marijuana Businesses Act; H.R. 9702 to amend the Internal Revenue Code of 1986 to allow deductions and credits relating to expenditures in connection with marijuana sales conducted in compliance with state law. On September 27, 2023, the Senate Banking, Housing, and Urban Affairs Committee passed the SAFER Banking Act, which would protect financial institutions and other parties accepting money derived from the state-legal cannabis industry by “creat[ing] protections for financial institutions that provide financial services to [state-legal cannabis companies] and service providers for such businesses,” and also explicitly protects insurers. The provisions of the SAFER Banking Act are now pending a Senate floor vote and, if passed in both the Senate and the House, would impact the legal status of financial transactions involving cannabis or state-legal cannabis companies in the following years.\n\nThe recent Final Order by the DOJ and the upcoming hearing are subject to challenge through litigation. There can be no assurance the administrative process will result in rescheduling of cannabis under the CSA, or that any of the above pieces of legislation will ultimately be passed into law in the United States in the 119th Congress.\n\nOn December 20, 2018, the 2018 Farm Bill was signed into law in the United States. The 2018 Farm Bill, among other things, defines hemp, removes substances that meet the definition of l hemp, including CBD derived from hemp from the CSA and allows for hemp production and sale in the United States. The passage of the 2018 Farm Bill has allowed the Company to advance its hemp\n\n21\n\n \n\ninterests in the United States. The United States FDA has retained authority over the addition of hemp-derived CBD and THC to products that fall within the Federal Food, Drug, and Cosmetic Act. So far, the FDA has stated that (a) to date, it has approved only one cannabis-derived drug product (a prescription drug to treat two forms of epilepsy and seizures associated with tuberous sclerosis) and three cannabis-related drug products (synthetically derived products), (b) it has seen only limited data about CBD safety and the data it has seen points to risks that need to be considered before taking CBD for any reason, (c) some CBD products are being marketed with unproven medical claims and are of unknown quality, and (d) it is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement and existing regulatory pathways for foods and dietary supplements are not appropriate for CBD. Since the passage of the 2018 Farm Bill, the FDA has periodically issued warning letters to CBD companies, which have been primarily sent to companies making unfounded medical claims related to major diseases regarding their products. On November 12, 2025, Congress enacted an appropriations bill which modified the definition of hemp, which will go into effect on November 12, 2026. This new definition narrows what qualifies as federally legal hemp, effectively prohibiting most intoxicating hemp products currently sold in the U.S. marketplace.\n\nIn light of the FDA’s statements, courts have found that the FDA’s position on CBD amounts to guidance and have stayed cases until FDA issues final regulations. Some states take the position that CBD products are not legally permitted to be sold, but increasingly, more states are allowing CBD foods, beverages, and supplements to be sold in-state and issuing more comprehensive regulations for the testing and labelling of those products.\n\nIn 2023, the FDA announced that it would not create a regulated pathway for CBD through traditional food or dietary supplement frameworks, and further legislation will be required. Following that announcement, two U.S. Representatives have introduced the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2023 and the CBD Product Safety and Standardization Act of 2023 to regulate such products. Neither piece of legislation has received a hearing in Congress, and while a stated priority for key members of Congress, there can be no assurance that any legislation regulating CBD will move or become law this Congress or that the FDA will change its approach and create a regulatory pathway for CBD products as food or dietary supplements.\n\nFinally, there are several cases pending in the Second, Fourth, and Ninth Circuits challenging state and local cannabis licensure programs as violative of the Dormant Commerce Clause doctrine, which generally restricts states from enforcing policies that impede interstate commerce.\n\nOur objective is to capitalize on the opportunities presented as a result of the changing regulatory environment governing the cannabis industry in the United States. Unless and until U.S. federal law is effective permitting a lawful pathway through the CSA with respect to medical and/or adult-use cannabis (and as to the timing or scope of the effective date of any such potential changes there can be no assurance), there is a risk that federal authorities may enforce current federal law, and the business of these entities may be deemed to be producing, cultivating, extracting, or dispensing cannabis or the Company may be considered to be aiding or abetting or otherwise engaging in a conspiracy to commit such acts in violation of the CSA and other federal laws in the United States.\n\nThere is a risk that our interpretation of laws, regulations and guidelines, including, but not limited to, the CSA, the associated regulations, various state regulations and applicable stock exchange rules and regulations may differ from those of others, including those of such government authorities, securities regulators and stock exchanges. In addition, we have and will endeavor to cause the entities that we invest in to only conduct business in a state-law compliant manner by including appropriate representations, warranties and covenants in agreements with such entities. Any violation of these terms would result in a breach of the applicable agreement between us and such entity and, accordingly, may have a material adverse effect on our business, operations and financial condition. In particular, we may be required to divest its interest in an entity or risk significant fines, penalties, administrative sanctions, convictions, settlements or delisting from the TSX and/or Nasdaq and there is no assurance that any divestiture will be completed on terms favorable to us or at all.\n\nFor these reasons, our interests in the U.S. cannabis market may be subject to heightened scrutiny by regulators, stock exchanges, clearing agencies and other Canadian and U.S. authorities. Please refer to “Risk Factors” under Item 1A of this Comprehensive Form 10-K for further discussion.\n\nWe are not considered a U.S. Marijuana Issuer (as defined in the Staff Notice) nor do we have material ancillary involvement in the U.S. cannabis industry in accordance with the Staff Notice. While we have an investment in Canopy USA, which is a platform that is intended to enable such U.S.-based companies that may themselves participate in the U.S. cannabis market to operate, the transaction structure was intended to ensure that we do not violate the federal laws of the United States respecting cannabis and does not allow us to direct the activities of Canopy USA. Where a non-controlled affiliate has expressed an intent to enter the U.S. cannabis market, we have taken steps to insulate ourselves from all economic and voting interests.\n\nCompetition\n\nHealth Canada issues licenses to cultivate, process and/or sell cannabis under the Cannabis Act. According to the Health Canada website, as of the date of this Comprehensive Form 10-K, 952 licenses to cultivate, distribute or sell cannabis have been issued. When considering the competitive landscape for cannabis production, cultivation and sale, each license issued by Health Canada is connected to a specific entity and a specific property, so to commence a new production site, an entity must apply for a new\n\n22\n\n \n\nlicense. Due to the number of licensees in Canada and the limited distribution channels for cannabis products, in the adult-use market, we compete on the basis of quality, price, brand recognition, consistency and variety of cannabis products. Internationally, the capacity of cannabis companies to operate is limited to those countries which have legalized aspects of the production, distribution, sale and use of cannabis. To date, only a limited number of international jurisdictions currently allow the sale of medical cannabis to patients and even fewer have permitted non-medicinal use of cannabis.\n\nIn our strategy towards medical cannabis sales both in Canada and in Europe, we place a distinct focus on physician and pharmacist familiarity and education to instill confidence in the effectiveness of our medical product portfolio for their patients. For adult-use cannabis, we devote significant time to our relationship with provincial wholesalers to ensure that our products are present in retail stores and readily available for customers to purchase.\n\nOverall, the barriers to entry remain low. Certain companies in the Canadian cannabis market have elected to enter into contract manufacturing arrangements with license holders pursuant to which the license holder cultivates, processes and sells cannabis under the brand of the contracting company without the contracting company being required to own its own cannabis production assets. This can reduce the barriers to entry for branding companies and increase the number of cannabis products available to consumers; however, such arrangements are contingent on procuring favorable terms under manufacturing arrangements with license holders and are still subject to the ongoing requirements of maintaining cannabis production assets.\n\nIn addition, there are unlicensed growers and retailers of cannabis that, while operating illegally, still act as significant competitors by either diverting customers away due to product choice, perceived quality of product, convenience of access or price point.\n\nStorz & Bickel is subject to its own unique competitive considerations but follows more traditional consumer packaged goods (“CPG”) market challenges than those observed within our primary cannabis activities and product portfolio.\n\nReportable Segments\n\nPrior to the three months ended June 30, 2025, we had the following four reportable segments: (i) Canada cannabis, (ii) International markets cannabis, (iii) Storz & Bickel, and (iv) This Works (divested December 18, 2023). Following a change in our CODM (as defined below) and internal reorganizations initiated by us in the three months ended March 31, 2025, we changed the structure of our internal management reporting. Accordingly, as of the three months ended June 30, 2025, we began reporting our financial results for the following two reportable segments:\n\n•\nCannabis - includes the global production, distribution and sale of a diverse range of cannabis and cannabis-related products. Sales in Canada are pursuant to the Cannabis Act, while international sales are pursuant to applicable international legislation, regulations and permits; and\n\n•\nStorz & Bickel - includes the production, distribution and sale of vaporizers and accessories.\n\nThese segments reflect how the Company’s operations are managed, how the Company’s Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), allocates resources and evaluates performance, and how the Company’s internal management financial reporting is structured. The Company’s CODM evaluates the performance of these segments, with a focus on (i) segment net revenue, and (ii) segment gross margin as the measure of segment profit or loss. Accordingly, information regarding segment net revenue and segment gross margin for the comparative periods have been restated to reflect the aforementioned change in reportable segments.\n\nCannabis\n\nCanadian Medical Cannabis Market\n\nWe are committed to science-based development and high-quality production of medical cannabis products and are equally committed to helping medical professionals responsibly authorize, and consumers to responsibly use, our products. Our commitment to addressing the safety and effectiveness of our products is a critical strategic imperative which helps to differentiate us in the growing cannabis market. We listen carefully to consumers and stay in close communication with regulatory agencies, governments and other stakeholders to identify new opportunities to deliver on consumer needs, enhance safety and support the growing industry.\n\nAs leaders in providing medical cannabis to patients in Canada, our award winning network of clinics allows us to serve patients nationwide across the Apollo, Canada House, and Abba Medix banners. Our primary focus is on ensuring the patient comes first by providing quick access to medical care to start their cannabis journey or helping medical cannabis patients seek reimbursement for their medicines. We are strong advocates for our patients and consistently seek to deliver products that are responsive to their needs.  Our Spectrum Therapeutics and Abba Medix medical brands are leaders in medical cannabis. Spectrum Therapeutics and Abba Medix produce and distribute a diverse portfolio of medical cannabis products to medical customers in Canada. The sale of medical cannabis to patients in Canada is the only sales channel in which we are permitted to sell products directly to our consumer. Accordingly, we continue to invest in patient education, medical practitioner support and our broader medical cannabis network, solidifying our position as a trusted leader in the Canadian medical cannabis market. We serve the needs of medical patients through a\n\n23\n\n \n\nwide range of cannabis products across a variety of brands, formats and strains, distributed through our e-commerce shop and the Abba Medix online platform.\n\nWe also believe that everyone who is eligible to be prescribed medical cannabis should have access to it, regardless of their income. Spectrum Therapeutics provides an income-tested compassionate pricing program, whereby eligible low-income patients can obtain a discount on regular prices. Additionally, we offer active military members and veterans without coverage a discount on regular prices through both Abba Medix and Spectrum Therapeutics platforms. Spectrum Therapeutics was the first in our industry to provide a compassionate pricing program, and today, we have several other programs to improve access to medical cannabis for authorized patients. As of March 31, 2026, there were 6,694 Spectrum Therapeutics patients and 331 Abba Medix patients accessing the veterans and compassionate pricing programs. We offer support for our veterans of the Canadian Armed Forces, including a team of customer care agents dedicated to assisting veterans with registration, ordering and insurance coverage; pre-approval and direct billing of VAC to ensure uninterrupted access to medication as well as full coverage (through VAC) of all cannabis products offered in our online Spectrum Therapeutics medical shop and via the Abba Medix online platform. Veterans do not have to pay out of pocket for any product; and can access special offers on our Storz & Bickel devices. For non-veterans, we also provide support through our customer care team to help patients identify if their medication is covered under the growing number of private health plans that have a medical cannabis component.\n\nCanadian Adult-Use Market\n\nWe are focused on leveraging our capabilities and scale in order to optimize our operating footprint and achieve profitability and growth. Our strategy in Canada includes:\n\n•\nContinuing the launch of our portfolio of innovative, consumer-centric, premium-focused adult-use cannabis products, specifically: inhalable cannabis (whole and pre-rolled flower, infused pre-rolls, vape and concentrates), ingestible cannabis (e.g. edible formats like gummies) and cannabis extracts (predominantly oils, softgels and hash) across Canada.\n\n•\nStrengthening our connection with consumers by offering differentiated brands and product portfolios that resonate with them. Our goal is to deepen consumer loyalty and trust to provide an elevated consumer experience.\n\nThe sale of adult-use cannabis is conducted in accordance with applicable provincial and territorial legislation governing retail sales and for online sales through applicable local agencies and distributors.\n\nEuropean Medical Cannabis Market\n\nOur primary strategy in the European medical cannabis market is to increase access to our medical cannabis products for patients in countries where it is legally permissible to do so, and to position ourselves as a trusted market leader. We provide raw material supply from our facility in Kincardine, Ontario and are in the process of adding additional capabilities at our Smiths Falls facility of finished product supply to meet the evolving demands of patients and consumers in the European market. Medical cannabis patients in Europe remain heavily reliant on dried flower with variable concentrations and profiles of cannabinoids, with a slow increase in demand for vaping products and extracts. Our operations are nimble to respond to these evolving changes in patient demand and physician preferences in each unique European market.\n\nCanopy Growth produces and makes available a portfolio of medical cannabis products to healthcare practitioners and medical patients in Germany and Poland and expect to do so in the United Kingdom over the coming fiscal year. We also consistently explore partnerships with several third parties to opportunistically enter other European markets where it is legally permissible to do so.\n\nAustralian Medical Cannabis Market\n\nWe provide raw material supply from our facility in Kincardine, Ontario to supply the Australian market. Medical cannabis patients in Australia can access our global portfolio of products, including Spectrum Therapeutics, as well as our Storz & Bickel line of medically approved vaporizers. Our strategy encompasses continuing the medical sales that began in Australia in May 2019 and supporting Australian patients through imports that are compliant with local regulations including an assortment of cannabis products, including oils, soft gels and flower.\n\nStorz & Bickel\n\nStorz & Bickel is widely recognized as the global leader in vaporizer design and manufacturing. From the brand’s home base in Tuttlingen, Germany, Storz & Bickel sets the standard for vaporizer excellence across a range of premium devices including the iconic tabletop Volcano vaporizer as well as a range of portable devices offering the same high-quality experience delivered by the Mighty, Mighty+, Crafty+, Veazy, and Venty.\n\nAs a further testament to the brand’s relentless focus on quality and consistency, the Storz & Bickel Volcano Medic 2, and Mighty+ Medic are all certified as medical cannabis vaporizers, and all the brand’s devices for medical as well as home use are produced with the same rigorous quality control processes at the Company’s ISO 13485 certified facility.\n\n24\n\n \n\nStorz & Bickel continues to define the present and future of leading vaporizer technology with a relentless focus on quality and innovation.\n\nCanopy USA\n\nOn October 24, 2022, we completed a number of strategic transactions in connection with the creation of Canopy USA, a U.S.-domiciled holding company wherein, as of October 24, 2022, Canopy USA holds certain U.S. cannabis investments previously held by us.\n\nOn May 19, 2023, the Company and Canopy USA entered into the First A&R Protection Agreement (as defined below) and amended and restated Canopy USA’s limited liability company agreement (the “A&R LLC Agreement”). Pursuant to the A&R LLC Agreement, the share capital of Canopy USA was amended to, among other things, (a) create a new class of Canopy USA Class B Shares, which may not be issued prior to the conversion of the Non-Voting Shares or the Class A shares of Canopy USA (the “Canopy USA Common Shares”) into Canopy USA Class B Shares; (b) amend the terms of the Non-Voting Shares such that the Non-Voting Shares will be convertible into Canopy USA Class B Shares (as opposed to Canopy USA Common Shares); and (c) amend the terms of the Canopy USA Common Shares such that upon conversion of all of the Non-Voting Shares into Canopy USA Class B Shares, the Canopy USA Common Shares will, subject to their terms, automatically convert into Canopy USA Class B Shares, provided that the number of Canopy USA Class B Shares to be issued to the former holders of the Canopy USA Common Shares will be equal to no less than 10% of the total issued and outstanding Canopy USA Class B Shares following such issuance. Accordingly, in no circumstances will the Company, at the time of such conversions, own more than 90% of the Canopy USA Class B Shares. On April 30, 2024, Canopy USA and its members entered into a second amended and restated limited liability company agreement (the “Second A&R LLC Agreement”). In accordance with the terms of the Second A&R LLC Agreement, the terms of the Non-Voting Shares have been amended such that the Non-Voting Shares are only convertible into Canopy USA Class B Shares following the date that the NASDAQ Stock Market or The New York Stock Exchange permit the listing of companies that consolidate the financial statements of companies that cultivate, distribute or possess marijuana (as defined in 21 U.S.C 802) in the United States. Based on the Company’s discussions with the Office of the Chief Accountant of the SEC, the Company believes that the staff of the SEC would not object to the deconsolidation of the financial results of Canopy USA from the Company’s financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).\n\nOn May 19, 2023, Canopy USA and Huneeus 2017 Irrevocable Trust (the “Trust”) entered into a share purchase agreement (the “Trust SPA”), which sets out the terms of the Trust’s investment in Canopy USA in the aggregate amount of up to US$20 million (the “Trust Transaction”). Agustin Huneeus, Jr. is the trustee of the Trust and is an affiliate of a shareholder of Jetty. On April 26, 2024, Canopy USA completed the first tranche closing of the Trust Transaction and pursuant to the Trust SPA, the timeline to complete the second tranche closing has lapsed. As of March 31, 2026, the Trust holds an aggregate 28,571,429 Canopy USA Common Shares and warrants to acquire up to 85,714,284 Voting Shares (as defined in the A&R LLC Agreement) expiring on April 26, 2031. Subject to the terms of the Trust SPA, the Trust has been granted options to acquire additional Voting Shares with a value of up to an additional US$10 million and one such additional option includes the issuance of additional warrants of Canopy USA.\n\nIn addition, subject to the terms and conditions of the A&R Protection Agreement (as defined below) and the terms of the option agreements to acquire Wana and Jetty, as applicable, Canopy Growth may be required to issue additional common shares in satisfaction of certain deferred and/or option exercise payments to the shareholders of Wana and Jetty. Canopy Growth will receive additional Non-Voting Shares from Canopy USA as consideration for any Company common shares issued in the future to the shareholders of Wana and Jetty.\n\nCanopy USA and certain entities controlled by Canopy USA (the “Canopy USA LPs”) currently hold an ownership interest in the following assets, among others:\n\n•\nWana – Canopy USA holds 100% of the membership interests of Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, “Wana”), a leading cannabis edibles brand in North America.\n\n•\nJetty – Canopy USA holds approximately 77% of the shares of Jetty, a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology.\n\n•\nAcreage – Canopy USA holds 100% of the issued and outstanding shares of Acreage, a vertically-integrated multi-state cannabis operator, with its main operations in densely populated states across the Northeast U.S., including New Jersey and New York.\n\n•\nTerrAscend – the Canopy USA LPs hold an aggregate of 64,564,487 common shares (the “TerrAscend Common Shares”) in the capital of TerrAscend Corp. (“TerrAscend”) on an as-converted basis and 22,474,130 TerrAscend Common Share purchase warrants with a weighted average exercise price of $6.07 per TerrAscend Common Share and expiring on December 31, 2032 (the “TerrAscend Warrants”). Assuming full exercise of the TerrAscend Warrants, the Canopy USA LPs will hold an aggregate of 87,038,617 TerrAscend Common Shares on an as-converted basis assuming conversion of the TerrAscend exchangeable shares (the “TerrAscend Exchangeable Shares”) held by the Canopy USA\n\n25\n\n \n\nLPs. TerrAscend is a leading North American cannabis operator with vertically integrated operations and a presence in Pennsylvania, New Jersey, Michigan and California as well as licensed cultivation and processing operations in Maryland.\n\nCanopy USA was determined to be a variable interest entity pursuant to ASC 810 - Consolidations (“ASC 810”). In accordance with ASC 810, Canopy Growth consolidated the financial results of Canopy USA up to April 30, 2024. As of April 30, 2024, Canopy Growth has deconsolidated the financial results of Canopy USA and has a non-controlling interest in Canopy USA as of such date.\n\nOwnership of U.S. Cannabis Investments\n\nThe shares and interests in Acreage, Wana and Jetty are held, directly or indirectly, by Canopy USA and the shares and warrants in TerrAscend are held directly by the Canopy USA LPs, and Canopy Growth no longer holds a direct interest in any shares or interests in such entities. Canopy Growth holds non-voting and non-participating shares (the “Non-Voting Shares”) in the capital of Canopy USA and an interest in the Canopy USA LPs. The Non-Voting Shares do not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy USA. The Non-Voting Shares are convertible into Class B shares of Canopy USA (the “Canopy USA Class B Shares”), provided that such conversion shall only be permitted following the Stock Exchange Permissibility Date. The Company also has the right (regardless of the fact that its Non-Voting Shares are non-voting and non-participating) to appoint one member to the Canopy USA board of managers (the “Canopy USA Board”).\n\nAs of March 31, 2026, the Trust holds 28,571,429 Canopy USA Common Shares, the shareholders of Wana collectively hold 60,955,929 Canopy USA Common Shares and a wholly-owned subsidiary of the Company holds all of the issued and outstanding Non-Voting Shares in the capital of Canopy USA, representing approximately 84.4% of the issued and outstanding shares in Canopy USA on an as-converted basis.\n\nCanopy Growth and Canopy USA are also party to a protection agreement (the “Protection Agreement”) to provide for certain covenants in order to preserve the value of the Non-Voting Shares held by Canopy Growth until such time as the Non-Voting Shares are converted in accordance with their terms, provided that, such conversion shall only be permitted following the Stock Exchange Permissibility Date, but does not provide Canopy Growth with the ability to direct the business, operations or activities of Canopy USA. The Protection Agreement was amended and restated on May 19, 2023 (the “First A&R Protection Agreement”) and on January 25, 2024 (the “Second A&R Protection Agreement” and together with the First A&R Protection Agreement, the “A&R Protection Agreement”).\n\nUntil such time as Canopy Growth converts its Non-Voting Shares into Canopy USA Class B Shares following the Stock Exchange Permissibility Date, Canopy Growth will have no economic or voting interest in Canopy USA or the Canopy USA LPs. Canopy USA will continue to operate independently of Canopy Growth.\n\nAcreage Agreements\n\nOn June 4, 2024, the option to acquire the issued and outstanding Class E subordinate voting shares (the “Fixed Shares”) of Acreage (the “Acreage Option”) was exercised in accordance with the terms of the arrangement agreement dated April 18, 2019, as amended on May 15, 2019, September 23, 2020 and November 17, 2020 (the “Existing Acreage Arrangement Agreement”). Concurrently with the closing of the acquisition of the Fixed Shares pursuant to the exercise of the Acreage Option, on December 9, 2024, the Fixed Shares were issued to Canopy USA upon closing of the Acreage Acquisition (as defined below). Accordingly, Canopy Growth does not hold any Fixed Shares or Floating Shares (as defined below). The acquisition of the Floating Shares pursuant to the court-approved plan of arrangement occurred immediately prior to the acquisition of the Fixed Shares pursuant to the Existing Acreage Arrangement Agreement such that 100% of the issued and outstanding shares of Acreage are owned by Canopy USA.\n\nOn June 3, 2024, a wholly-owned subsidiary of the Company (the “Optionor”) acquired certain outstanding debt of Acreage (the “Debt Acquisition”).\n\nThe Optionor entered into various agreements in connection with the Debt Acquisition in order to acquire approximately US$99.8 million of Acreage’s outstanding debt (the “Acquired Debt”) in exchange for approximately US$69.8 million in cash and the release of approximately US$30.1 million that was held in escrow.\n\nThe Optionor subsequently transferred approximately US$2.2 million of the Acquired Debt and entered into a series of agreements, including an amended and restated credit agreement (the “First ARCA”), which provided for, among other things, the Acquired Debt, certain interest payments to be paid-in-kind, revisions to certain financial covenants and, following certain events, an extension to the maturity date.\n\nOn September 13, 2024, the Optionor entered into a series of transactions with, among others, an arm’s length third-party lender (the “ARCA Lender”). Pursuant to such transactions, the Optionor, the ARCA Lender and Acreage, among others, amended and restated the First ARCA pursuant to a second amended and restated credit agreement dated as of September 13, 2024 (the “Second ARCA”). Pursuant to the Second ARCA and an agreement among lenders entered into on September 13, 2024 between, among others, the Optionor and the ARCA Lender, all interest owing to the Optionor under the Second ARCA is, subject to the consent of the ARCA Lender, to be paid-in-kind and not in cash.\n\n26\n\n \n\nOn July 29, 2025, the Company entered into an agreement with certain lenders under the Credit Facility in order to permit the Company to grant Canopy USA certain consents in order to allow Canopy USA to secure from the ARCA Lender an additional US$22 million in financing for Acreage and its subsidiaries (the “Acreage Financing”). In connection with the Acreage Financing, the Optionor, the ARCA Lender and Acreage, among others, amended and restated the Second ARCA pursuant to a third amended and restated credit agreement dated as of July 29, 2025 (the “Third ARCA” and such amounts owing under the Third ARCA, the “Acreage and Wana Debt”). In connection with the Third ARCA, each of Canopy Elevate I LLC, Canopy Elevate II LLC and Canopy Elevate III LLC (each a wholly-owned subsidiary of Canopy USA and collectively, “Elevate”) entered into a limited recourse pledge agreement pursuant to which such entities pledged, as security for the obligations under the Third ARCA, each of their respective equity interests in each of the Wana entities. In addition, as security for the obligations under the Third ARCA, each of the Wana entities provided guarantees and security over substantially all of their respective assets.\n\nAs of March 31, 2026, the aggregate principal amount of the Acreage and Wana Debt owing to the Optionor was approximately $175.4 million (US$125.8 million) and the aggregate principal amount of the Acreage and Wana Debt owing to the ARCA Lender was approximately $110.2 million (US$79.0 million).\n\nAcreage is currently in default under the Third ARCA. On May 12, 2026, the Optionor, the ARCA Lender and Acreage, among others, entered into a Forbearance Agreement (the “Forbearance Agreement”). Under the terms of the Forbearance Agreement, Acreage is required to appoint, among others, a chief restructuring officer and financial advisor in order to assist Acreage with a strategic review of its business. The initial forbearance period had an outside date of June 5, 2026, which was extended at the sole discretion of the lenders to June 16, 2026. The forbearance may be further extended at the sole discretion of the lenders. The portion of the Acreage and Wana Debt owing to the ARCA Lender ranks in priority to the portion of the Acreage and Wana Debt owing to the Company and may be exercised by the ARCA Lender over the assets pledged as security under the Acreage and Wana Debt. See “Risk Factors – In the event Acreage or Wana, as guarantor, cannot satisfy the debt obligations as they become due, the Acreage and Wana Debt may not be repaid and the Company may lose the entirety of its investment in the Acreage and Wana Debt, and, in the event Acreage or Wana are unable to continue as a going concern, which may occur in the event that the ARCA Lender enforces its security over the Acreage and Wana Debt, there would be a negative impact on Canopy USA’s business, financial results and operations and have an adverse impact on the Company’s U.S. strategy, and, potentially, negatively affect the share price of the Canopy Shares” under Item 1A of this Comprehensive Form 10-K.\n\nAcreage Acquisition\n\nOn December 9, 2024, Canopy USA completed the acquisition of all of the issued and outstanding Fixed Shares and Class D subordinate voting shares (the “Floating Shares”) of Acreage (the “Acreage Acquisition”) and now owns 100% of the issued and outstanding shares of Acreage. In connection with such acquisition, Canopy Growth issued an aggregate of 5,888,291 Canopy Shares to former shareholders of Acreage.\n\nIn connection with the Acreage Acquisition, Canopy Growth: (i) issued 5,118,426 Canopy Shares pursuant to the tax receivable bonus plans of High Street Capital Partners, LLC, as subsidiary of Acreage; and (ii) 306,151 Canopy Shares were issuable in connection with Canopy USA’s acquisition of the minority interests of certain subsidiaries of Acreage, of which 268,057 Canopy Shares were issued as of March 31, 2026.\n\nImmediately following the closing of the Acreage Acquisition, Canopy Growth issued an aggregate of 1,315,553 Canopy Shares and 1,197,658 common share purchase warrants to certain securityholders of Acreage in order to satisfy an outstanding liability. Each common share purchase warrant entitles the holder thereof to acquire one Canopy Share at an exercise price of US$3.66 until June 6, 2029.\n\nIn exchange for the issuances of Canopy Shares, warrants and other replacement securities in connection with the Acreage Acquisition, Canopy Growth received additional Non-Voting Shares with a value of approximately $50.8 million and Canopy USA delivered guarantees in respect of the obligations owing pursuant to the Elevate loan receivable. Refer to Note 13 for more information on Canopy USA investment balances.\n\nHuman Capital Resources\n\nAs of March 31, 2026, Canopy Growth had 1,128 total employees, including 923 employees in Canada, as compared to 960 total employees as of March 31, 2025 including 728 employees in Canada. As of March 31, 2026, the Company had 205 employees outside of Canada (principally supporting our international medical cannabis business and Storz & Bickel businesses). Our employee concentration has been adjusted to primarily focus on production, distribution, sales enablement and commercial execution.\n\nOur human resources department strives to make Canopy Growth a first-choice employer within the cannabis industry. In fiscal 2026, we continued to focus on the following priorities: (1) offering a market competitive employee value proposition inclusive of unique rewards that align to our strategy; (2) creating talent density with a focus on employee development and; (3) fostering employee enthusiasm and commitment towards their role and Canopy’s vision of unleashing the power of cannabis to improve lives. The ways in which we are driving these three key priorities are highlighted below.\n\n27\n\n \n\nOur employee value proposition includes rewarding employees competitively, treating our employees fairly, and providing the flexibility needed to cultivate greatness. In fiscal 2026, we continued to execute against our road map of programs designed to attract, motivate, recognize, reward, and retain the talent we need to realize our vision and deliver on our growth expectations, while holistically supporting total employee well-being. We greatly advanced our technical capabilities, making rewards easily accessible to our employees and making data readily available to our leaders.\n\nOur talent management strategy included formal succession planning resulting in the development of our internal workforce through skill development classes and leadership education. We also implemented 360 assessments and leadership coaching programs for senior leaders. This has allowed us to access our bench strength and continually adjust our workforce strategy to ensure we are filing talent gaps with high performing and diverse external talent, while also preparing for future challenge that may arise.\n\nOur culture is our key differentiator and what we believe makes us a first-choice employer in the cannabis industry. We also believe that employee engagement is critical to our success and therefore we gather employee feedback on a regular basis. This allows us to access our employees’ understanding of business progress, the sentiment around our culture, and to identify areas for improvement. This feedback is incorporated in the development of the human capital priorities as well as the overall company priorities.\n\nWe remain committed to our diversity, equity & inclusion (“DEI”) efforts by embedding equity into every part of the organization and creating an inclusive organizational environment. We incorporate DEI into our talent assessment process by embedding fairness, consistency, and objectivity at every stage of evaluation of our employees. Our approach relies on clearly defined role criteria, standardized assessment tools, and structured decision making to minimize bias and ensure all employees are evaluated against the same expectations. We review assessment outcomes for equity across employee demographics annually.\n\nWe have learned the importance of providing flexibility and well-being resources to our employees. We consistently provide access to wellness webinars, assistance programs, and a variety of supplementary resources. In addition, we continue to support remote work and our focus is on fostering a culture of accountability and connection which is at the core of our engagement with employees. Furthermore, all of our employees complete annual training on applicable corporate policies including our Code of Business Conduct and Ethics, Whistleblower Protection Policy, Insider Trading Policy and Anti-Bribery and Anti-Corruption Policy.\n\nWebsite Access to Reports\n\nWe maintain a website at www.canopygrowth.com. We are providing the address to our website solely for the information of investors. The information contained on our website is not a part of, nor is it incorporated by reference into this Comprehensive Form 10-K. Through our website, we make available, free of charge, our annual proxy statement, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish them to the SEC. The SEC maintains a website that contains these reports at www.sec.gov.\n\n28"}