AGM 2021

Sep 14, 2021

Hello, and welcome to the 2021 Canopy Growth Annual General and Special Meeting of Shareholders. Validated shareholders and proxy holders may ask questions in the designated field on the virtual meeting web portal. Questions may be submitted now until the close of the meeting. Questions regarding matters to be voted on will be addressed before voting is concluded. In addition to others, please limit yourself to one question, which is most submitted in accordance with the rules of conduct, which are posted in the meeting materials section of the virtual meeting web portal. I will now turn the meeting over to Judy Schmeling, Chairman of the Board of Directors for Canopy Growth. Please go ahead. Thank you. Good morning, and welcome to the 2021 Annual General and Special Meeting of Shareholders for Canopy Growth Corporation. I am Judy Schmeling, Chair of the Board of Directors of Canopy Growth, and I will be acting as Chair of the meeting today. As permitted in our bylaws, we are holding our meeting virtually by way of live audio webcast. It is now 2:0:1 p. M. Eastern Time and the annual meeting will now come to order. I would like to start by introducing the current members of Canopy's Board in addition to myself who are in attendance today. David Klein, Chief Executive Officer of Canopy David Lazarato William A. Newlands James A. Fabia, Jr. And Terry Yanofsky. I would also like to introduce the following members of Canopy's management team who are also in attendance today. Mike Lee, Executive Vice President and Chief Financial Officer Phil Scheer, Chief Legal Officer and Corporate Secretary and Judy Hong, Vice President, Investor Relations and Competitive Intelligence. In addition, we are joined by Mahesh Mani from KC and G, our independent auditors. He will be available during the meeting to respond to Finally, Canopy has appointed Broadridge Financial Services through its representatives to act as scrutineer. I would now like to introduce Phil Scherer, who will be acting as secretary for today's meeting. Thanks, Judy. During the meeting, we will review the matters described in our proxy statement dated July 29, 2021, following which voting will commence. When all matters of business have been voted on, the scrutineer will titillate the votes and I will announce the preliminary results. The final voting results will be filed promptly with the SEC and on SEDAR. Following the formal portion of the meeting, we will commence a brief question and answer period. The Board fixed July 21, 2021 as the record date for determining shareholders entitled to vote at this meeting. An affidavit has been delivered by Broadridge Financial Services The notice of this meeting has been duly given and attesting to the fact that the applicable meeting materials were mailed to all applicable shareholders as of the record date in accordance with applicable law. This affidavit will be attached to the minutes of this meeting as scheduled. The scrutineers have advised me that prior to the meeting, proxies were received from the holders sufficient number of common shares to constitute a quorum for purposes of transacting business. The formal report of the scrutineers will be attached to the minutes of this meeting as scheduled. With a quorum present, this meeting is duly constituted for the transaction of all business. Judy, please commence with the review of the meeting proposals. Thank you, Phil. No shareholder nominations or proposals have been properly submitted or filed in advance of this meeting, And therefore, the matters for this meeting are those listed on the meeting agenda. The first matter of business is the presentation Canopy's audited consolidated financial statements as at March 31, 2021, and for each of the years in the 3 year period ended March 31, 2020. The financial statements along with the auditor's report thereon are available to shareholders for review and presentation under the Meeting Materials section of the virtual meeting web portal. The financial statements and the related auditors report are also included in our annual report, which can be accessed under Events and Presentations tab in the Investors section of our website. Further details of each proposal is set forth in our proxy statement, which was filed with the SEC and on SEDAR on July 29, 2021. Proposal 1, the election of each of the 7 director nominees named in our proxy statement deserve until our 2022 Annual Meeting of Shareholders or until their successors are duly elected or appointed. The 7 Director nominees are Judy A. Schmeling, David Klein, Robert L. Hansen, David Lazarado, William A. Newlands, James A. Sabia, Jr. And Teresa Yanofsky. Proposal 2, the reappointment of KPMG LLP, Chartered Professional Accountants as Canopy's independent registered public accounting for fiscal year 2022 and to authorize the Board to fix KPMG's remuneration. Proposal 3, the approval of an ordinary resolution confirming and ratifying certain amendments to the company's bylaws, including an increase in the quorum requirements for meetings of shareholders and other amendments of a housekeeping nature that were previously approved by the Board as described in the proxy statement. Proposal 4, to adopt on an advisory non binding basis a resolution approving the compensation of the company's named executive officers as described in the proxy statement. The Board unanimously recommends voting in favor of each proposals 1 through 4. It is now 2:0:6 p. M. Eastern Time and the polls are now open. Every shareholder has one vote in respect of each shareholder. If you have already voted or sent in a proxy, there's no reason for you to vote by poll unless you would like to change your vote. You may vote by clicking the Vote Here button on the virtual meeting web portal. Following your selections, you must click Submit in order for your vote to be counted. Polls will be open for approximately 1 minute to allow registered shareholders and duly appointed proxy holders An opportunity to vote. During this time, I will answer submitted shareholder questions that relate to the proposals being voted on. Judy Hong, have we received any such shareholder questions? No, we have not received any questions regarding the proposals at this point. Thank you. With no questions, we will leave the line silent until voting is concluded. It is now 2:0:8 p. M. Eastern Time and I declare the polls close. Bill, could you please announce the preliminary voting results? I have been advised by the scrutineers that based on the votes represented by proxy at this meeting, A sufficient number of votes have been cast in favor of each of the proposals presented at this meeting and in favor of each of the nominees. I therefore declare that each of the proposals has passed And each of the Director nominees has been elected. Thank you, Phil. Rather than hold up the meeting for the final tabulation of votes Casper, the online voting system, I direct that the final results of each poll be attached to the minutes of this meeting and filed with the SEC and on SEDAR as required. With all form of business of the meeting concluded, it is now 2:0:9 p. M. Eastern Time And the 2021 Annual General and Special Meeting of Shareholders is now adjourned. Thank you. We will now begin a brief question and answer session, where our CEO, David Klein, will be answering questions submitted by shareholders. Judy Hong, our Vice President, Investor Relations and Competitive Intelligence will moderate the Q and A session. Thank you, Judy. Thank you, Judy. We will try to answer as many questions as possible. Only questions submitted in accordance with our rules of conduct posted on the meeting site will be addressed. If we did not answer your Before we begin, let me remind you that we may make forward looking statements during the question and answer session. Actual results may differ from these statements. We will refer you to the documents which the company files from time to time with the SEC and on SEDAR. In particular, we refer you to the information under the heading Risk Factors in Part 1, Item 1A of our Annual Report on Form 10 ks filed with the SEC and SEDAR on June 1, 2021. These documents contain and identify important factors could cause actual results to differ materially from those contained in our projections on forward looking statements. Undue reliance should not be placed on such With that, we will begin with the first question. So David, there's a question that has been submitted in advance. It's asking, can you speak on how you're leveraging your R and D to bring differentiated innovations to market? Yes. Thanks, Judy. So we're building capabilities in consumer insights and then leveraging what we believe are already best in class R and D capabilities accelerate that innovation pipeline. Our aspiration is to understand new and existing cannabis consumers better than anyone, including their needs dates, consumption occasions, shopping behavior and affinity for various product attributes. These industry leading insights are then used to inform our innovation strategy, leading to breakthrough products that ultimately lead to strong brands and consumer loyalty. Our innovation pipeline is set to deliver more than 100 SKUs over the remainder of fiscal 2022. In particular, I'm really excited about the potential that we see for highly differentiated mood management products. By harnessing the power of the cannabis plant and its 100 plus cannabinoids, we're developing products that are targeted at various needs states, including supporting healthy sleep or relaxation and stress reduction. So by way of example, today we launched our new Whistle CBD vape in the U. S. Whistle incorporates custom interchangeable pods with 3 uniquely formulated options to help consumers dial in their desired effect whether it be focus, calm or winding down. Woodfill is initially to be sold in over 3,000 Circle K Stores nationally in the U. S, making this the biggest launch for the U. S. Market so far. And looking ahead, we plan to introduce a range of cannabis based mood management products over the coming months, including topical, creams and gummies. Great. So there are a couple of questions that the shareholders have submitted. It relates To our growth opportunity and our stock price, so just in light of the fact that our share price have been a bit stagnant in the last Yaron, can you speak to the growth opportunities that you see in hand and what are some of the steps to really drive acceleration In growth? Yes. So, first of all, from a share price perspective, the entire industry is down, whether it's The Canadian LPs or it's the U. S. Multistate operator. So the whole industry is trading down over the last several months. And a lot of that has to do, I think, with concerns around timing for federal permits ability in the U. From my perspective, what we need to do as an organization is, deliver on market share growth, Execute against our plans to bring the NPD to the market that I just talked about as well as Build our brands in the market so that we can create those differentiated positions. And then be super prepared to enter the U. S, Which we are through our investments in acreage and tariffs and through our Routes to market that we're creating in the U. S. With our CBD businesses and our CPG businesses like the CBD businesses being Quattro And Whittall that we just announced as well as Martha Stewart edibles and then our CPG businesses Of BioSteel, This Works, and Stores and Bickel. I think if we execute on all of those In all of those areas of the business, I think that we're positioned to create a lot of value for our shareholders, in particular, Starting from the current share price. One more question around the THC Beverages. So just In the context of the beverages that had been launched in the past year, how are you feeling about the beverage portfolio generally? And again, what are the That's to drive growth of your beverage business both from a category standpoint and from a portfolio standpoint in the Canadian market. Yes. So first of all, we're really we remain really bullish on drinks, in particular, as we expand The consumers who come into the category, we see drinks as a very effortless way to enter the category and realize The power of the cannabis plant. So I think that We remain pleased with the performance of our THC drinks. We have a 35% dollar share of the total beverage category As measured over the full year, we see a lot of new entrants coming into the marketplace, which we think is good because We think that it gives consumers the opportunity to sample and enjoy new products and that's a real important element to building a strong THC beverage category. The trend that we have seen over the last year and we've seen it in many regards led by our deep space drink is Consumers are developing a preference for higher THC drinks with a bit of a sweet spot somewhere between 5 milligrams and 10 milligrams per serving and so which we've had available the 10 milligram offering in deep space, Well, we've now added some 5 milligram offerings in some of our recent innovation like Tweed iced tea and Tweed Fizz, Seltzer Beverages, which we think both meets the consumer need from a taste Profile, but also gives us the gives them the right level of THC. One more question that came in just now. When do you believe Canopy will be Profitable? Yes. So we said that we would expect to be profitable by the end of this fiscal year on a quarterly basis. We're still confident in that projection. We don't give quarter on quarter guidance, but Last week, Mike and I presented at a conference where we talked about the key drivers to profitability are really continued revenue growth as we continue to manage our costs And get throughput through our manufacturing facilities, which help leverage the fixed costs that we have in our business. So We remain bullish on hitting that profitability target. It's all relating to, however, our ability to drive top line growth Somewhere into that $250,000,000 of revenue area per quarter. There appears to be no more questions in queue. So this concludes the question and answer period. I will now pass it on to David to conclude the call. Thanks for joining us today and for your continued support of Canopy Growth. We look forward to sharing exciting new developments and products with you and our customers over the coming year. I'll now pass the call back over to the operator. That concludes the meeting. Thank you for attending. You may now disconnect.