Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~February 7, ~~2020,~~2024, there were ~~371,272,132~~91,114,604 common shares of the registrant issued and outstanding.

Unless otherwise noted or the context indicates otherwise, references in this Quarterly Report on Form 10-Q (“Quarterly Report”) to the ~~“Corporation”,~~“Company,” “Canopy ~~Growth”, “we”,~~Growth,” “we,” “us” and “our” refer to Canopy Growth Corporation and its direct and indirect ~~wholly owned subsidiaries and, if applicable, its joint ventures and investments accounted for by the equity method;~~wholly-owned subsidiaries; the term “cannabis” means the plant of any species or subspecies of genus Cannabis and any part of that plant, including all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers; and the term “U.S. hemp” has the meaning given to the term “hemp” in the U.S. Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), including hemp-derived cannabidiol (“CBD”).

This Quarterly Report contains references to our trademarks and trade names and to trademarks and trade names belonging to other entities. Solely for convenience, trademarks and trade names referred to in this ~~report~~Quarterly Report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trademarks or trade names to imply a relationship with, or endorsement or sponsorship of us or our business by, any other companies.

All currency amounts in this Quarterly Report are stated in Canadian dollars, which is our reporting currency, unless otherwise noted. All references to “dollars” or “CDN$” are to Canadian dollars and all references to “US$” are to U.S. dollars.

(in thousands of Canadian dollars, except number of shares and per share data, unaudited)


		June 30, 2020			March 31, 2020				December 31, 2023			March 31, 2023
ASSETS	ASSETS							ASSETS
Current assets:
Cash and cash equivalents		$	975,870		$	1,303,176			$	142,745		$	667,693
Short-term investments			1,060,901			673,323				43,436			105,526
Restricted short-term investments			16,436			21,539				7,275			11,765
Amounts receivable, net			72,578			90,155				63,924			68,459
Inventory			389,800			391,086				86,917			83,230
Assets of discontinued operations										29,401			116,291
Prepaid expenses and other assets			98,362			85,094				23,582			24,290
Total current assets			2,613,947			2,564,373				397,280			1,077,254
Equity method investments			58,654			65,843
Other financial assets			273,624			249,253				392,324			568,292
Property, plant and equipment			1,508,668			1,524,803				340,479			471,271
Intangible assets			444,199			476,366				119,072			160,750
Goodwill			1,929,418			1,954,471				85,237			85,563
Noncurrent assets of discontinued operations										-			56,569
Other assets			17,320			22,636				25,359			19,996
Total assets		$	6,845,830		$	6,857,745			$	1,359,751		$	2,439,695

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY							LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	89,368		$	123,393			$	25,837		$	31,835
Other accrued expenses and liabilities			82,981			64,994				49,775			53,743
Current portion of long-term debt			22,570			16,393
Current portion of long-term debt and convertible debentures										91,336			556,890
Liabilities of discontinued operations										-			67,624
Other liabilities			124,757			215,809				54,397			93,750
Total current liabilities			319,676			420,589				221,345			803,842
Long-term debt			477,836			449,022				520,738			749,991
Deferred income tax liabilities			45,816			47,113
Liability arising from Acreage Arrangement			285,000			250,000
Warrant derivative liability			287,122			322,491
Noncurrent liabilities of discontinued operations										-			3,417
Other liabilities			168,239			190,660				73,005			122,423
Total liabilities			1,583,689			1,679,875				815,088			1,679,673
Commitments and contingencies
Redeemable noncontrolling interest			81,600			69,750
Canopy Growth Corporation shareholders' equity:
Common shares - $nil par value; Authorized - unlimited number of shares; Issued - 370,865,639 shares and 350,112,927 shares, respectively			6,724,245			6,373,544
Common shares - $nil par value; Authorized - unlimited number of shares; Issued and outstanding - 82,931,963 shares and 51,730,555 shares, respectively1										8,219,747			7,938,571
Additional paid-in capital			2,520,371			2,615,155				2,578,519			2,506,485
Accumulated other comprehensive income			152,415			220,899
Accumulated other comprehensive loss										(16,049	)		(13,860	)
Deficit			(4,431,737	)		(4,323,236	)			(10,237,693	)		(9,672,761	)
Total Canopy Growth Corporation shareholders' equity			4,965,294			4,886,362				544,524			758,435
Noncontrolling interests			215,247			221,758				139			1,587
Total shareholders' equity			5,180,541			5,108,120				544,663			760,022
Total liabilities and shareholders' equity		$	6,845,830		$	6,857,745			$	1,359,751		$	2,439,695

~~The accompanying notes are an integral part of these condensed interim consolidated financial statements.~~1

~~CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS~~

~~(in thousands of Canadian dollars, except number of shares and per~~ Prior year share ~~data, unaudited)~~

Three months ended June 30,

2020

2019

Revenue

$
119,088

$
103,391

Excise taxes

8,672

12,909

Net revenue

110,416

90,482

Cost of goods sold

103,921

72,192

Gross margin

6,495

18,290

Operating expenses

Selling, general and administrative expenses

135,392

145,647

Share-based compensation

30,685

87,362

Asset impairment and restructuring costs

12,794

-

Total operating expenses

178,871

233,009

Operating loss

(172,376
)

(214,719
)
Loss from equity method investments

(7,189
)

(1,833
)
Other income (expense), net

48,205

32,768

Loss before income taxes

(131,360
)

(183,784
)
Income tax recovery (expense)

3,038

(10,267
)
Net loss

(128,322
)

(194,051
)
Net loss attributable to noncontrolling interests and
redeemable noncontrolling interest

(19,821
)

(8,182
)
Net loss attributable to Canopy Growth Corporation

$
(108,501
)

$
(185,869
)

Basic and diluted loss per share

$
(0.30
)

$
(0.54
)
Basic and diluted weighted average common shares outstanding

363,763,347

346,779,156

Comprehensive loss:

Net loss

$
(128,322
)

$
(194,051
)
Other comprehensive (loss) income, net of income tax effect

Fair value changes of own credit risk of financial liabilities

(15,360
)

14,610

Foreign currency translation

(53,124
)

(60,744
)
Total other comprehensive loss, net of income tax effect

(68,484
)

(46,134
)
Comprehensive loss

(196,806
)

(240,185
)
Comprehensive loss attributable to noncontrolling interests
and redeemable noncontrolling interest

(19,821
)

(8,182
)
Comprehensive loss attributable to Canopy Growth Corporation

$
(176,985
)

$
(232,003
)

~~The accompanying notes are an integral part of these condensed interim consolidated financial statements.~~amounts have been retrospectively adjusted to reflect the Share Consolidation (as defined below), which became effective on December 15, 2023. See Note 2 for details.

Additional paid-in capital

Accumulated

Common shares

Share-based reserve

Warrants

Ownership changes

Redeemable noncontrolling interest

other comprehensive income (loss)

Deficit

Noncontrolling interests

Total

Balance at March 31, 2020

$
6,373,544

$
517,741

$
2,638,951

$
(501,403
)

$
(40,134
)

$
220,899

$
(4,323,236
)

$
221,758

$
5,108,120

Other issuances of common shares
   and warrants

26,214

(26,798
)

-

-

-

-

-

-

(584
)
Exercise of warrants

315,256

-

(70,266
)

-

-

-

-

-

244,990

Exercise of Omnibus Plan stock
   options

9,231

(4,509
)

-

-

-

-

-

-

4,722

Share-based compensation

-

29,140

-

-

-

-

-

-

29,140

Changes in redeemable
   noncontrolling interest

-

-

-

-

(22,513
)

-

-

10,663

(11,850
)
Ownership changes relating to
   noncontrolling interests

-

-

-

162

-

-

-

2,647

2,809

Comprehensive loss

-

-

-

-

-

(68,484
)

(108,501
)

(19,821
)

(196,806
)
Balance at June 30, 2020

$
6,724,245

$
515,574

$
2,568,685

$
(501,241
)

$
(62,647
)

$
152,415

$
(4,431,737
)

$
215,247

$
5,180,541

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

(in thousands of Canadian dollars, except number of shares and per share data, unaudited)

Additional paid-in capital

Accumulated

Common shares

Share-based reserve

Warrants

Ownership changes

Redeemable noncontrolling interest

other comprehensive income (loss)

Deficit

Noncontrolling interests

Total

Balance at March 31, 2019

$
6,029,222

$
505,172

$
1,589,925

$
(500,963
)

$
(2,110
)

$
(5,905
)

$
(835,118
)

$
285,485

$
7,065,708

Other issuances of common shares
   and warrants

18,600

(18,674
)

-

-

-

-

-

-

(74
)
Exercise of warrants

897

-

(470
)

-

-

-

-

-

427

Exercise of Omnibus Plan stock
   options

28,671

(12,594
)

-

-

-

-

-

-

16,077

Share-based compensation

-

84,769

-

-

-

-

-

-

84,769

Acreage warrant modification

-

-

1,049,153

-

-

-

(2,166,792
)

-

(1,117,639
)
Changes in redeemable
   noncontrolling interest

-

-

-

-

615

-

-

(2,715
)

(2,100
)
Ownership changes relating to
   noncontrolling interests

-

-

-

(150
)

-

-

-

2,830

2,680

Comprehensive loss

-

-

-

-

-

(46,134
)

(185,869
)

(8,182
)

(240,185
)
Balance at June 30, 2019

$
6,077,390

$
558,673

$
2,638,608

$
(501,113
)

$
(1,495
)

$
(52,039
)

$
(3,187,779
)

$
277,418

$
5,809,663

1 Prior year share and per share amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~SHAREHOLDERS’ EQUITY

Three months ended June 30,

2020

2019

Cash flows from operating activities:

Net loss

$
(128,322
)

$
(194,051
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation of property, plant and equipment

17,415

13,587

Amortization of intangible assets

16,632

7,165

Share of loss on equity method investments

7,189

1,833

Share-based compensation

30,685

87,362

Asset impairment and restructuring costs

12,794

-

Income tax (recovery) expense

(3,038
)

10,267

Non-cash foreign currency

8,688

2,834

Change in operating assets and liabilities, net of effects from purchases
of businesses:

Amounts receivable

17,577

13,506

Prepaid expenses and other assets

(16,059
)

(24,009
)
Inventory

(10,772
)

(50,716
)
Accounts payable and accrued liabilities

3,755

(12,582
)
Other, including non-cash fair value adjustments

(75,090
)

(13,486
)
Net cash used in operating activities

(118,546
)

(158,290
)
Cash flows from investing activities:

Purchases of and deposits on property, plant and equipment

(61,547
)

(211,824
)
Purchases of intangible assets

(3,088
)

(7,692
)
Proceeds on sale of intangible assets

18,337

-

(Purchases) redemption of short-term investments

(382,486
)

687,818

Investments in equity method investments

-

(2,824
)
Investments in other financial assets

(2,564
)

(29,414
)
Investment in Acreage Arrangement

-

(395,190
)
Recovery of amounts related to construction financing

10,000

-

Payment of acquisition related liabilities

(4,511
)

(21,447
)
Net cash outflow on acquisition of noncontrolling interests

(125
)

-

Net cash outflow on acquisition of subsidiaries

-

(425,024
)
Net cash used in investing activities

(425,984
)

(405,597
)
Cash flows from financing activities:

Payment of share issue costs

(595
)

(74
)
Proceeds from issuance of shares by Canopy Rivers

92

86

Proceeds from exercise of stock options

4,722

16,077

Proceeds from exercise of warrants

244,990

427

Issuance of long-term debt

4,439

-

Repayment of long-term debt

(6,345
)

(98,207
)
Net cash provided by (used in) financing activities

247,303

(81,691
)
Effect of exchange rate changes on cash and cash equivalents

(30,079
)

(18,620
)
Net decrease in cash and cash equivalents

(327,306
)

(664,198
)
Cash and cash equivalents, beginning of period

1,303,176

2,480,830

Cash and cash equivalents, end of period

$
975,870

$
1,816,632

Supplemental disclosure of cash flow information

Cash received during the period:

Income taxes

$
2,000

$
-

Cash paid during the period:

Income taxes

$
408

$
-

Noncash investing and financing activities

Additions to property, plant and equipment

$
17,337

$
124,427

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

1 Includes cash of our discontinued operations of $9,314 and $13,610 for March 31, 2023 and 2022, respectively.

2 Includes cash of our discontinued operations of $nil and $13,261 for December 31, 2023 and 2022, respectively.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

(in thousands of Canadian dollars, ~~unaudited)~~unaudited, unless otherwise indicated)

1.1. DESCRIPTION OF BUSINESS

Canopy Growth Corporation is a publicly traded corporation, incorporated in Canada, with its head office located at 1 Hershey Drive, Smiths Falls, Ontario. References ~~in these condensed interim consolidated financial statements~~herein to “Canopy Growth” or “the Company” refer to Canopy Growth Corporation and its subsidiaries.

The principal activities of the Company are the production, distribution and sale of a diverse range of cannabis ~~as regulated by the Access to Cannabis~~and cannabinoid-based products for ~~Medical Purposes Regulations (“ACMPR”)~~both adult-use and medical purposes under a portfolio of distinct brands in Canada uppursuant to ~~and including October~~the Cannabis Act, SC 2018, c 16 ~~2018. On~~(the "Cannabis Act"), which came into effect on October 17, 2018 ~~the ACMPR was superseded by The Cannabis Act which~~and regulates both the ~~production, distribution, and possession of cannabis for both~~ medical and ~~adult recreational access~~adult-use cannabis markets in Canada. The Company ishas also ~~expanding~~expanded to jurisdictions outside of Canada where ~~federally lawful and regulated for~~ cannabis and/or hemp ~~including~~is federally lawful, permissible and regulated, and the Company, through its subsidiaries, ~~which operate~~operates in the United States, ~~Europe, Latin America~~Australia, Germany, and ~~the Caribbean, and Asia / Pacific. Through its partially owned subsidiary Canopy Rivers Inc. (“Canopy Rivers”),~~certain other global markets. Additionally, the Company ~~also provides growth capital~~produces, distributes and ~~a strategic support platform that pursues investment opportunities in the global~~sells vaporizers and similar cannabis ~~sector, where federally lawful.~~accessories.

2.2. BASIS OF PRESENTATION

These condensed interim consolidated financial statements have been presented in Canadian dollars and are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Canopy Growth has determined that the Canadian dollar is the most relevant and appropriate reporting currency as, despite continuing shifts in the relative size of ~~our~~the Company's operations across multiple geographies, the majority of ~~our~~its operations are conducted in Canadian dollars and ~~our~~its financial results are prepared and reviewed internally by management in Canadian dollars. ~~Our~~The Company's condensed interim consolidated financial statements, and the financial information contained herein, are reported in thousands of Canadian dollars, except share and per share amounts or as otherwise stated.

Certain information and footnote disclosures normally included in the audited annual consolidated financial statements prepared in accordance with U.S. GAAP have been omitted or condensed. These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2020~~2023 (the “Annual Report”), and have been prepared on a basis consistent with the accounting policies as described in the Annual Report.

These condensed interim consolidated financial statements are unaudited and reflect adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods in accordance with U.S. GAAP.

The results reported in these condensed interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for an entire fiscal year. The policies set out below are consistently applied to all periods presented, unless otherwise noted.

Going Concern

The condensed interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As reflected in the condensed interim consolidated financial statements, the Company has certain material debt obligations coming due in the short-term, has suffered recurring losses from operations and requires additional financing to fund its business and operations. If the Company is unable to raise additional capital, it is possible that it will be unable to meet certain of its financial obligations.

These matters, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the issuance of these condensed interim consolidated financial statements.

In view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financial requirements and to raise additional capital, and the success of its future operations. The condensed interim consolidated financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.

Management plans to fund the operations and debt obligations of the Company through existing cash positions. The Company is also currently evaluating several different strategies and intends to pursue actions that are expected to increase its liquidity position, including, but not limited to, pursuing additional actions under the Company's cost-savings plan, seeking additional financing from both the public and private markets through the issuance of equity and/or debt securities, and monetizing additional assets.

The Company's management cannot provide assurances that the Company will be successful in accomplishing any of its proposed financing plans. Management also cannot provide any assurance as to unforeseen circumstances that could occur within the next twelve months or, if the Company raises capital, thereafter, which could increase the Company’s need to raise additional capital on an immediate basis, which capital may not be available to the Company.

Principles of consolidation

~~The accompanying~~These condensed interim consolidated financial statements include the accounts of the Company and all entities in which the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity. All intercompany accounts and transactions have been eliminated on consolidation. Information on the Company’s subsidiaries with noncontrolling interests is included in Note ~~21.~~22.

~~Variable interest entities~~

A variable interest entity (“VIE”) is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to control the entity’s activities or do not substantially participate in the gains and losses of the entity. Upon inception of a contractual agreement, and thereafter, if a reconsideration event occurs, the Company performs an assessment to determine whether the arrangement contains a variable interest in an entity and whether that entity is a VIE. The primary beneficiary of a VIE is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Under Accounting Standards Codification (“ASC”) 810 – ~~Consolidations, where the Company concludes that it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE.~~

~~Equity method investments~~

Investments accounted for using the equity method include those investments where the Company (i) can exercise significant influence over the other entity and (ii) holds common stock and/or in-substance common stock of the other entity. Under the equity method, investments are carried at cost, and subsequently adjusted for the Company’s share of net income (loss), comprehensive income (loss) and distributions received from the investee. If the current fair value of an investment falls below its carrying amount, this may indicate that an impairment loss should be recorded. Any impairment losses recognized are not reversed in subsequent periods. Refer to Note 9 for additional information on the Company’s investments accounted for using the equity method.

Use of estimates

The preparation of these condensed interim consolidated financial statements and ~~accompanying~~ notes in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates.

Share Consolidation

On December 13, 2023, the Company announced that the Company’s board of directors (the “Board”) had approved the consolidation of the Company’s issued and outstanding common shares on the basis of one post-consolidation common share for every 10 pre-consolidation common shares (the “Share Consolidation”). The Share Consolidation was implemented to ensure that the Company continues to comply with the listing requirements of the Nasdaq Global Select Market.

The Share Consolidation was approved by the Company’s shareholders at the annual general and special meeting of shareholders held on September 25, 2023. The Share Consolidation became effective on December 15, 2023. No fractional common shares were issued in connection with the Share Consolidation. Any fractional common shares arising from the Share Consolidation were deemed to have been tendered by its registered owner to the Company for cancellation for no consideration. In addition, the exercise or conversion price and/or the number of common shares issuable under any of the Company’s outstanding convertible securities, were proportionately adjusted in connection with the Share Consolidation.

All issued and outstanding common shares, per share amounts, and outstanding equity instruments and awards exercisable into common shares, as well as the exchange ratios for the Fixed Shares (as defined below) and the Floating Shares (as defined below) in connection with the Acreage Amending Arrangement and the Floating Share Arrangement (as defined below), respectively, contained in the condensed interim consolidated financial statements of the Company and notes thereto have been retroactively adjusted to reflect the Share Consolidation for all prior periods presented.

New accounting policies

Recently Adopted Accounting Pronouncements

~~Measurement of Credit Losses on Financial~~Convertible Instruments and Contracts in an Entity’s Own Equity

In ~~June 2016,~~August 2020, the Financial Accounting Standards Board ~~(“FASB”~~(the "FASB") issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):Accounting ~~Standards Update (“ASU”) 2016-13,~~ ~~Financial~~for Convertible Instruments ~~– Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~and Contracts in an Entity’s Own Equity (“ASU ~~2016-13”~~2020-06”)., which simplifies the accounting for convertible instruments by removing the separation models for convertible debt instruments and convertible preferred stock with (1) cash conversion features, and (2) beneficial conversion features. In addition, ASU ~~2016-13 requires~~2020-06 enhances information transparency by making targeted improvements to the ~~measurement of all expected credit losses~~disclosures for ~~financial assets held at~~convertible instruments and earnings-per-share guidance and amends the ~~reporting date based~~guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.

The Company adopted the guidance on ~~historical experience, current conditions~~April 1, 2022, using the modified retrospective approach with the cumulative effect recognized as an adjustment to the opening deficit balance, and, ~~reasonable~~accordingly, prior period balances and ~~supportable forecasts. Adoption~~disclosures have not been restated. Upon adoption of ASU ~~2016-13~~2020-06, the Supreme Debentures (as defined below) will ~~require financial institutions~~be accounted for under the separation model for a substantial premium instead of a beneficial conversion feature resulting in an increased debt discount to be amortized over the life of the instrument. The adoption of this guidance resulted in increased additional paid-in capital by $4,452, decreased long-term debt by $3,723, and ~~other organizations~~decreased accumulated deficit by $729 for non-cash accretion expense prior to ~~use forward-looking information to better formulate their credit loss estimates.~~ ~~Canopy Growth adopted the new standard as of~~ April 1, ~~2020. There was no impact of adopting ASU 2016-13 on the condensed interim consolidated financial statements.~~2022.

~~Fair Value Measurement~~10

Accounting Guidance Not Yet Adopted

Segment Reporting

In ~~August 2018,~~November 2023, the FASB issued ASU ~~2018-13,~~ ~~Disclosure Framework – Changes~~2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the ~~Disclosure Requirements for Fair Value Measurement (Topic 820)~~ (“chief operating decision maker and included within each reported measure of segment profit or loss. ASU 2018-13”). ASU 2018-13 adds, modifies, and removes certain fair value measurement disclosure requirements. Canopy Growth adopted the new standard as of April 1, 2020. There was no impact of adopting ASU 2018-13 on the condensed interim consolidated financial statements.

~~Accounting Guidance not yet adopted~~

~~Income Taxes~~

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”), which among other things, eliminates certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-122023-07 is effective for ~~annual and interim periods~~fiscal years beginning after December 15, ~~2020. Early adoption is permitted.~~2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the impact on the consolidated financial statements and expects to implement the provisions of ASU ~~2019-12 effective April 1, 2021.~~2023-07 for our fiscal year ending March 31, 2025.

Income Taxes

In ~~January 2020,~~December 2023, the FASB issued ASU ~~2020-01,~~ ~~Investments-Equity Securities~~2023-09, Income Taxes (Topic ~~321)~~740): Improvements to Income Tax Disclosures (“ASU 2023-09”), ~~Investments-Equity Method~~which enhances income tax disclosures, primarily through changes to the rate reconciliation and ~~Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)~~.disaggregation of income taxes paid. ASU 2020-01 clarifies the interaction of accounting for the transition into and out of the equity method. The new standard also clarifies the accounting for measuring certain purchased options and forward contracts to acquire investments. The guidance in ASU 2020-012023-09 is effective for annual ~~and interim~~ periods beginning after December 15, ~~2020,~~2024, with early adoption permitted. The Company is evaluating the impact on the consolidated financial statements and expects to implement the provisions of ASU ~~2020-01 effective April 1, 2021.~~2023-09 for our fiscal year ending March 31, 2026.

3. CANOPY USA

Reorganization - Creation of Canopy USA

On October 24, 2022, Canopy Growth completed a number of strategic transactions in connection with the creation of Canopy USA, LLC ("Canopy USA"), a new U.S.-domiciled holding company (the “Reorganization”). Following the implementation of the Reorganization, Canopy USA, as of October 24, 2022, holds certain U.S. cannabis investments previously held by Canopy Growth, which is expected to enable Canopy USA, following, among other things, the Meeting (as defined below) and the exercise of the Acreage Option (as defined below), including the issuance of the Fixed Shares to Canopy USA, to consummate the acquisitions of Acreage Holdings, Inc. ("Acreage"), Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, "Wana" and each, a "Wana Entity"), and Lemurian, Inc. ("Jetty"). There were no changes recorded in the estimated fair values of the U.S. cannabis investments described below upon implementation of the Reorganization, and their transfer from Canopy Growth to Canopy USA.

Following the implementation of the Reorganization, as of October 24, 2022, Canopy USA holds an ownership interest in the following assets, among others:

•

Wana - The options to acquire 100% of the membership interests of Wana (the "Wana Options"), a leading cannabis edibles brand in North America.

•

Jetty - The options to acquire 100% of the shares of Jetty (the "Jetty Options"), a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology.

3.Canopy Growth currently retains the option to acquire the issued and outstanding Class E subordinate voting shares (the “Fixed Shares”) of Acreage (the “Acreage Option”), representing approximately 70% of the total shares of Acreage, at a fixed share exchange ratio of 0.03048 of a common share of Canopy Growth per Fixed Share. Concurrently with the closing of the acquisition of the Fixed Shares pursuant to the exercise of the Acreage Option, the Fixed Shares will be issued to Canopy USA. In addition, Canopy USA has agreed to acquire all of the issued and outstanding Class D subordinate voting shares of Acreage (the “Floating Shares”) by way of a court-approved plan of arrangement (the “Floating Share Arrangement”) in exchange for 0.045 of a common share of Canopy Growth for each Floating Share held. Acreage is a leading 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.

In addition, as of October 24, 2022, Canopy USA held direct and indirect interests in the capital of TerrAscend Corp. (“TerrAscend”), 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. Canopy USA’s direct and indirect interests in TerrAscend included: (i) 38,890,570 exchangeable shares in the capital of TerrAscend (the “TerrAscend Exchangeable Shares”), an option to purchase 1,072,450 TerrAscend common shares (the “TerrAscend Common Shares”) for an aggregate purchase price of $1.00 (the “TerrAscend Option”) and 22,474,130 TerrAscend Common Share purchase warrants previously held by Canopy Growth (the “TerrAscend Warrants”); and (ii) the debentures and loan agreement between Canopy Growth and certain TerrAscend subsidiaries.

On December 9, 2022, Canopy USA and certain limited partnerships that are controlled by Canopy USA entered into a debt settlement agreement with TerrAscend, TerrAscend Canada Inc. and Arise BioScience, Inc., whereby $125,467 in aggregate loans, including accrued interest thereon, payable by certain subsidiaries of TerrAscend were extinguished and 22,474,130 TerrAscend Warrants, being all of the previously issued TerrAscend Warrants controlled by Canopy USA (the “Prior Warrants”) were cancelled in

exchange for: (i) 24,601,467 TerrAscend Exchangeable Shares at a notional price of $5.10 per TerrAscend Exchangeable Share; and (ii) 22,474,130 new TerrAscend Warrants (the "New Warrants" and, together with the TerrAscend Exchangeable Shares, the "New TerrAscend Securities") with a weighted average exercise price of $6.07 per TerrAscend Common Share and expiring on December 31, 2032. Following the issuance of the New TerrAscend Securities, Canopy USA beneficially owns: (i) 63,492,037 TerrAscend Exchangeable Shares; (ii) 22,474,130 New Warrants; and (iii) the TerrAscend Option. The TerrAscend Exchangeable Shares can be converted into TerrAscend Common Shares at Canopy USA's option, subject to the terms of the A&R Protection Agreement (as defined below).

Following the implementation of the Reorganization, Canopy USA was determined to be a variable interest entity pursuant to ASC 810 - Consolidations ("ASC 810") and prior to the completion of the Reorganization Amendments (as defined below), Canopy Growth was determined to be the primary beneficiary of Canopy USA. As a result of such determination and in accordance with ASC 810, Canopy Growth consolidated the financial results of Canopy USA.

Amendments to Canopy USA Structure

Following the creation of Canopy USA, the Nasdaq Stock Market LLC ("Nasdaq") communicated its position to the Company stating that companies that consolidate “the assets and revenues generated from activities in violation under federal law cannot continue to list on Nasdaq”. Since the Company is committed to compliance with the listing requirements of the Nasdaq, the Company and Canopy USA effectuated certain changes to the initial structure of the Company’s interest in Canopy USA that were intended to facilitate the deconsolidation of the financial results of Canopy USA within the Company’s financial statements. These changes included, among other things, modifying the terms of the Protection Agreement between the Company, its wholly-owned subsidiary and Canopy USA as well as the terms of Canopy USA’s limited liability company agreement and amending the terms of certain agreements with third-party investors in Canopy USA to eliminate any rights to guaranteed returns (collectively, the “Reorganization Amendments”).

On May 19, 2023, the Company and Canopy USA implemented the Reorganization Amendments, which included, entering into the First A&R Protection Agreement (as defined below) and amending and restating Canopy USA’s limited liability company agreement (the “A&R LLC Agreement”) in order to: (i) eliminate certain negative covenants that were previously granted by Canopy USA in favor of the Company as well as delegating to the managers of the Canopy USA Board (as defined below) not appointed by Canopy Growth the authority to approve the following key decisions (collectively, the “Key Decisions”): (a) the annual business plan of Canopy USA; (b) decisions regarding the executive officers of Canopy USA and any of its subsidiaries; (c) increasing the compensation, bonus levels or other benefits payable to any current, former or future employees or managers of Canopy USA or any of its subsidiaries; (d) any other executive compensation plan matters of Canopy USA or any of its subsidiaries; and (e) the exercise of the Wana Options or the Jetty Options, which for greater certainty means that the Company’s nominee on the Canopy USA Board will not be permitted to vote on any Key Decisions while the Company owns Non-Voting Shares (as defined below); (ii) reduce the number of managers on the Canopy USA Board from four to three, including, reducing the Company’s nomination right to a single manager; (iii) amend the share capital of Canopy USA to, among other things, (a) create a new class of Canopy USA Class B Shares (as defined below), which may not be issued prior to the conversion of the Non-Voting Shares or the Canopy USA Common Shares (as defined below) 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, as a result of the Reorganization Amendments, in no circumstances will the Company, at the time of such conversions, own more than 90% of the Canopy USA Class B Shares.

In connection with the Reorganization Amendments, on 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. Pursuant to the terms of the Trust SPA, the Trust will, subject to certain terms and conditions contained in the Trust SPA be issued Canopy USA Common Shares in two tranches with an aggregate value of up to US$10 million along with warrants of Canopy USA to acquire additional Canopy USA Common Shares. In addition, subject to the terms of the Trust SPA, the Trust has also been granted options to acquire additional Voting Shares (as defined in the A&R LLC Agreement) 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.

In addition, subject to the terms and conditions of the A&R Protection Agreement 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.

On November 3, 2023, the Company received a letter from the staff of the SEC (the “Staff”) in which the Staff indicated that, despite the Reorganization Amendments, it would object to the deconsolidation of the financial results of Canopy USA from the Company's financial statements in accordance with U.S. GAAP once Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage. The Company subsequently had discussions with the Office of Chief Accountant of the SEC (the "OCA") and determined to make certain additional amendments to the structure of Canopy USA (the “Additional Reorganization Amendments”) to facilitate the deconsolidation of Canopy USA from the financial results of Canopy Growth in accordance with U.S. GAAP upon Canopy USA’s acquisition of Wana, Jetty or Acreage. In that regard, the Company filed a revised preliminary proxy statement with the SEC on each of January 25, 2024 and February 5, 2024 in connection with the Amendment Proposal (as defined below) that discloses these Additional Reorganization Amendments. In connection with the Additional Reorganization Amendments, Canopy USA and its members expect to enter into a second amended and restated limited liability company agreement (the “Second A&R LLC Agreement”) immediately prior to the completion of the first tranche closing of the Trust Transaction. Upon the effective date of the Second A&R LLC Agreement, the terms of the Non-Voting Shares will be amended such that the Non-Voting Shares will only be 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 (the “Triggering Event Date”). Based on the Company’s discussions with the OCA, upon effectuating the Additional Reorganization Amendments, the Company believes that the Staff would not object to the deconsolidation of the financial results of Canopy USA from the Company’s financial statements in accordance with U.S. GAAP once Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage.

Ownership of U.S. Cannabis Investments

Following the implementation of the Reorganization, the shares and interests in Acreage, Wana, Jetty and TerrAscend are held, directly or indirectly, by Canopy USA, and Canopy Growth no longer holds a direct interest in any shares or interests in such entities, other than the Acreage Option. Canopy Growth holds non-voting and non-participating shares (the “Non-Voting Shares”) in the capital of Canopy USA. The Non-Voting Shares do not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy USA. Following the Reorganization Amendments, the Non-Voting Shares are convertible into Class B shares of Canopy USA (the “Canopy USA Class B Shares”), provided that following the execution of the Second A&R LLC Agreement, such conversion shall only be permitted following the Triggering Event 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").

As of December 31, 2023, a third party investor owned all of the issued and outstanding Class A shares of Canopy USA (the “Canopy USA Common Shares”) and a wholly-owned subsidiary of the Company holds Non-Voting Shares in the capital of Canopy USA, representing approximately more than 99% of the issued and outstanding shares in Canopy USA on an as-converted basis.

On October 24, 2022, Canopy USA and the Company also entered into an agreement with, among others, Nancy Whiteman, the controlling shareholder of Wana, which was amended and restated on May 19, 2023, whereby subsidiaries of Canopy USA agreed to pay additional consideration in order to acquire the Wana Options and the future payments owed in connection with the exercise of the Wana Options (as described in Note 11) will be reduced to US$3.00 in exchange for the issuance of Canopy USA Common Shares and Canopy Growth common shares (the “Wana Amending Agreement”). In accordance with the terms of the Wana Amending Agreement, Canopy USA Common Shares and Canopy Growth common shares will be issued to the shareholders of Wana, each with a value equal to 7.5% of the fair market value of Wana as of the later of: (i) the date that the Wana Options are exercised; and (ii) the closing date of the first tranche of the Trust Transaction (the “Wana Valuation Date”) less any net debt of Wana as of the Wana Valuation Date plus any net cash of Wana as of Wana Valuation Date. The value of Wana and the number of Canopy USA Common Shares will be determined based on the fair market value of Wana and the Canopy USA Common Shares, respectively, as determined by an appraiser appointed by the Company and an appraiser appointed by the shareholders of Wana (and, if required, a third appraiser to be appointed by the initial two appraisers). The Canopy USA Common Shares and Canopy Growth common shares will only be issued to Ms. Whiteman, or entities controlled by Ms. Whiteman, on the later of: (i) the date of exercise of the Wana Options and (ii) the date that CBG Holdings LLC (“CBG”) and Greenstar Canada Investment Limited Partnership (“Greenstar”), indirect, wholly-owned subsidiaries of Constellation Brands, Inc. (“CBI”), have converted their Canopy Growth common shares into Exchangeable Shares. The Wana Amending Agreement may be terminated and no Canopy USA Common Shares or Canopy Growth common shares will be issued to Ms. Whiteman, or entities controlled by Ms. Whiteman in the event that CBG and Greenstar have not converted their Canopy Growth common shares into Exchangeable Shares by the later of: (i) sixty days after the Meeting; or (ii) December 31, 2023. The Canopy USA Common Shares issuable to Ms. Whiteman, or entities controlled by Ms. Whiteman, will also be subject to a repurchase right exercisable at any time after the 36 month anniversary of the closing of the transaction contemplated by the Wana Amending Agreement (the “Wana Repurchase Right”) to repurchase all Canopy USA Common Shares that have been issued at a price per Canopy USA Common Share equal to the fair market value as determined by an appraiser. As part of this agreement, Canopy USA has granted Ms. Whiteman the right to appoint one member to the Canopy USA Board and a put right on the same terms and conditions as the Wana Repurchase Right.

Shares are converted in accordance with their terms, provided that following the execution of the Second A&R LLC Agreement, such conversion shall only be permitted following the Triggering Event 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 in connection with: (a) the Reorganization Amendments (the “First A&R Protection Agreement”); and (b) the Additional Reorganization Amendments (the “Second A&R Protection Agreement” and together with the First A&R Protection Agreement, the “A&R Protection Agreement”).

Upon closing of Canopy USA’s acquisition of Acreage, Canopy Growth will receive additional Non-Voting Shares from Canopy USA in consideration for the issuance of common shares of the Company that shareholders of Acreage will receive in accordance with the terms of the Existing Acreage Arrangement Agreement (as defined below) and the Floating Share Arrangement Agreement (as defined below).

Until such time as Canopy Growth converts the Non-Voting Shares into Canopy USA Class B Shares following the Triggering Event Date, Canopy Growth will have no economic or voting interest in Canopy USA, Wana, Jetty, TerrAscend, or Acreage. Canopy USA, Wana, Jetty, TerrAscend, and Acreage will continue to operate independently of Canopy Growth.

Acreage Agreements

On October 24, 2022, Canopy Growth entered into an arrangement agreement with Canopy USA and Acreage, as amended (the “Floating Share Arrangement Agreement”), pursuant to which, subject to approval of the holders of the Floating Shares and the terms and conditions of the Floating Share Arrangement Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares by way of a court-approved plan on arrangement under the Business Corporations Act (British Columbia) (the “Floating Share Arrangement”) in exchange for 0.045 of a Company common share for each Floating Share held. In connection with the Floating Share Arrangement Agreement, Canopy Growth has irrevocably waived the Acreage Floating Option (as defined below) existing under the Existing Acreage Arrangement Agreement.

On October 24, 2022, the Company and Canopy USA entered into a third amendment to tax receivable agreement (the “Amended TRA”) with, among others, certain current or former unitholders (the “Holders”) of High Street Capital Partners, LLC, a subsidiary of Acreage (“HSCP”), pursuant to HSCP’s amended tax receivable agreement (the “TRA”) and related tax receivable bonus plans with Acreage. Pursuant to the Amended TRA, the Company, on behalf of Canopy USA, agreed to issue common shares of the Company with a value of US$30.4 million to certain Holders as consideration for the assignment of such Holder’s rights under the TRA to Canopy USA. As a result of the Amended TRA, Canopy USA is the sole member and beneficiary under the TRA. In connection with the foregoing, the Company issued: (i) 564,893 common shares with a value of $20.6 million (US$15.2 million) to certain Holders on November 4, 2022 as the first installment under the Amended TRA; and (ii) 710,208 common shares with a value of $20.6 million (US$15.2 million) to certain Holders on March 17, 2023, as the second installment under the Amended TRA. The Company, on behalf of Canopy USA, also agreed to issue common shares of the Company with a value of approximately US$19.6 million to certain eligible participants pursuant to HSCP’s existing tax receivable bonus plans to be issued immediately prior to completion of the Floating Share Arrangement.

On October 24, 2022, Canopy Growth and Canopy USA entered into voting support agreements with certain of Acreage’s directors, officers and consultants pursuant to which such persons have agreed, among other things, to vote their Floating Shares in favor of the Floating Share Arrangement, representing approximately 7.3% of the issued and outstanding Floating Shares.

In addition to shareholder and court approvals, the Floating Share Arrangement is subject to approval of the Amendment Proposal (as defined below) and applicable regulatory approvals including, but not limited to, Toronto Stock Exchange (“TSX”) approval and the satisfaction of certain other closing conditions customary in transactions of this nature. The Floating Share Arrangement received the requisite approval from the holders of Floating Shares at the special meeting of Acreage shareholders held on March 15, 2023 and on March 20, 2023 Acreage obtained a final order from the Supreme Court of British Columbia approving the Floating Share Arrangement. The Floating Share Arrangement Agreement has been amended several times to extend the Exercise Outside Date (as defined in the Floating Share Arrangement Agreement), which was initially March 31, 2023. The most recent amendment to the Floating Share Arrangement Agreement extended the Exercise Outside Date to March 31, 2024. The completion of the Floating Share Arrangement is subject to satisfaction or, if permitted, waiver of certain closing conditions, including, among others, approval of the Amendment Proposal on or prior to the Exercise Outside Date.

It is intended that Canopy Growth’s existing option to acquire the Fixed Shares on the basis of 0.03048 of a Company common share per Fixed Share will be exercised after the Meeting 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”). Canopy Growth will not hold any Fixed Shares or Floating Shares. Completion of the acquisition of the Fixed Shares following exercise of the Acreage Option is subject to the satisfaction of certain conditions set forth in the Existing Acreage Arrangement Agreement. The acquisition of the Floating Shares pursuant to the Floating Share Arrangement is anticipated to occur 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 will be owned by Canopy USA on closing of the acquisition of both the Fixed Shares and the Floating Shares.

On November 15, 2022, a wholly-owned subsidiary of Canopy Growth (the “Acreage Debt Optionholder”) and Acreage’s existing lenders (the “Lenders”) entered into an option agreement, which superseded the letter agreement dated October 24, 2022 between the parties, pursuant to which the Acreage Debt Optionholder was granted the right to purchase the outstanding principal, including all accrued and unpaid interest thereon, of Acreage’s debt, being an amount up to US$150.0 million (the “Acreage Debt”) from the Lenders in exchange for an option premium payment of $38.0 million (US$28.5 million) (the “Option Premium”), which was deposited into an escrow account on November 17, 2022. The Acreage Debt Optionholder has the right to exercise the option at its discretion, and if the option is exercised, the Option Premium will be used to reduce the purchase price to be paid for the outstanding Acreage Debt. In the event that Acreage repays the Acreage Debt on or prior to maturity, the Option Premium will be returned to the Acreage Debt Optionholder. In the event that Acreage defaults on the Acreage Debt and the Acreage Debt Optionholder does not exercise its option to acquire the Acreage Debt, the Option Premium will be released to the Lenders.

Special Shareholder Meeting

In connection with the Reorganization, Canopy Growth expects to hold a special meeting of shareholders (the “Meeting”) at which Canopy Growth shareholders will be asked to consider and, if deemed appropriate, to pass a special resolution authorizing an amendment to its articles of incorporation, as amended (the “Amendment Proposal”), in order to: (i) create and authorize the issuance of an unlimited number of a new class of non-voting and non-participating exchangeable shares in the capital of Canopy Growth (the “Exchangeable Shares”); and (ii) restate the rights of the Company’s common shares to provide for a conversion feature whereby each common share may at any time, at the option of the holder, be converted into one Exchangeable Share. The Exchangeable Shares will not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy Growth but will be convertible into common shares.

The Amendment Proposal must be approved by at least 66⅔% of the votes cast on a special resolution by Canopy Growth’s shareholders present in person or represented by proxy at the Meeting.

On October 24, 2022, CBG and Greenstar entered into a voting and support agreement with Canopy Growth (the “Voting and Support Agreement”). Pursuant to the terms of the Voting and Support Agreement, CBG and Greenstar agreed, subject to the terms and conditions thereof, among other things, to vote all of the Canopy Growth common shares beneficially owned, directed or controlled, directly or indirectly, by them for the Amendment Proposal.

In the event the Amendment Proposal is approved, and subject to the conversion by CBI of their Canopy Growth common shares into Exchangeable Shares, Canopy USA is expected to exercise the Wana Options and the Jetty Options. In the event the Amendment Proposal is not approved, Canopy USA will not be permitted to exercise its rights to acquire shares of Wana or Jetty and the Floating Share Arrangement Agreement will be terminated. In such circumstances, Canopy will retain the Acreage Option under the Existing Acreage Arrangement Agreement and Canopy USA will continue to hold the Wana Options and the Jetty Options, as well as the TerrAscend Exchangeable Shares and other securities in the capital of TerrAscend. In addition, the Company is contractually required to cause Canopy USA to exercise its repurchase right to acquire the Canopy USA Common Shares held by the third party investors.

Relationship with CBI

In connection with the Reorganization, CBI has indicated its current intention to convert all of its common shares of the Company into Exchangeable Shares, conditional upon the approval of the Amendment Proposal. However, any decision to convert will be made by CBI in its sole discretion, and CBI is not obligated to effect any such conversion.

In connection with the foregoing, on October 24, 2022, Canopy Growth entered into a consent agreement with CBG and Greenstar (the “Third Consent Agreement”), pursuant to which the parties agreed, among other things, that following the conversion by CBG and Greenstar of their respective Canopy Growth common shares into Exchangeable Shares, other than the Third Consent Agreement and the termination rights contained therein and the 4.25% unsecured senior notes due in 2023 (the "Canopy Notes") held by Greenstar, all agreements between Canopy Growth and CBI, including the Second Amended and Restated Investor Rights Agreement, dated as of April 18, 2019, by and among certain wholly-owned subsidiaries of CBI and Canopy Growth (the “Second Amended and Restated Investor Rights Agreement”), will be terminated. Pursuant to the terms of the Third Consent Agreement, CBG and Greenstar also agreed, among other things, that at the time of the conversion by CBG and Greenstar of their Canopy Growth common shares into Exchangeable Shares, (i) CBG will surrender the warrants held by CBG to purchase 13,974,545 common shares for cancellation for no consideration; and (ii) all nominees of CBI that are currently sitting on the Board will resign from the Board. In addition, pursuant to the Third Consent Agreement and following the Reorganization Amendments, Canopy Growth is contractually required to convert its Non-Voting Shares into Canopy USA Class B Shares, provided that following the execution of the Second A&R LLC Agreement, such conversion shall only be permitted following the Triggering Event Date, and cause Canopy USA to repurchase the Canopy USA Common Shares held by certain third-party investors in Canopy USA in the event CBG and Greenstar have not converted their respective common shares into Exchangeable Shares by sixty days after the Meeting (the “Termination Date”). The Third Consent Agreement will automatically terminate on the Termination Date.

Options, and the Floating Share Arrangement Agreement will be terminated. In such circumstances, Canopy Growth will retain the Acreage Option under the Existing Acreage Arrangement Agreement and Canopy USA will continue to hold the Wana Options and the Jetty Options, as well as the TerrAscend Exchangeable Shares and other securities in the capital of TerrAscend. If CBI does not convert its Canopy Growth common shares into Exchangeable Shares, the Company is also contractually required to cause Canopy USA to exercise its repurchase right to acquire the Canopy USA Common Shares held by the third party investors.

4. BIOSTEEL

On September 14, 2023, following a review of the strategic options for the BioSteel business unit, Canopy Growth ceased funding the operations of BioSteel Sports Nutrition Inc. ("BioSteel Canada") and commenced proceedings (the "CCAA Proceedings") under the Companies' Creditors Arrangement Act (the "CCAA") in the Ontario Superior Court of Justice (Commercial List) (the "CCAA Court") and sought and obtained recognition of that proceeding under Chapter 15 of the United States Bankruptcy Code. To assist with the sale process, the Court approved the appointment of a monitor.

As a result of the CCAA Proceedings, the most relevant activity of BioSteel Canada became the liquidation and sale of assets. Management concluded that Canopy Growth ceased to have the power to direct the relevant activity of BioSteel Canada because the liquidation and sale transactions required approval from the CCAA Court. Thus, Canopy Growth no longer has a controlling interest in BioSteel Canada and has deconsolidated the entity effective September 14, 2023. The deconsolidation of BioSteel Canada and related impairment charges are classified under losses from discontinued operations.

The strategic decisions made encompassed all operations of the BioSteel business unit, including those of BioSteel Canada. For this reason, the BioSteel segment results for all periods prior to the September 14, 2023 deconsolidation of BioSteel Canada, including costs to exit, are classified as discontinued operations.

On November 16, 2023, BioSteel Sports Nutrition USA LLC ("BioSteel US") and BioSteel Manufacturing LLC ("BioSteel Manufacturing" and collectively with BioSteel Canada and BioSteel US, the “BioSteel Entities”) were added as additional applicants in the CCAA Proceedings. As a result, the most relevant activity of both entities became the liquidation and sale of assets and distribution of cash and proceeds to their respective stakeholders and management concluded that Canopy Growth ceased to have the power to direct the relevant activities of BioSteel US and BioSteel Manufacturing because those activities required approval from the CCAA Court. Thus, Canopy Growth no longer has a controlling interest in either entity and has deconsolidated both entities effective November 16, 2023. The deconsolidation of BioSteel US and BioSteel Manufacturing and related impairment charges are classified under losses from discontinued operations.


	Three months ended						Nine months ended
	December 31,			December 31,			December 31,			December 31,
	2023			2022			2023			2022
				(As Restated)						(As Restated)
Net revenue	$	172		$	19,181		$	56,610		$	50,351
Cost of goods sold		1,900			24,504			145,625			64,779
Operating expenses		(726	)		33,405			97,851			143,423
Operating loss		(1,002	)		(38,728	)		(186,866	)		(157,851	)
Other income (expense), net1		14,481			2,150			(8,521	)		(10,687	)
Income tax (expense) recovery		-			(954	)		936			(954	)
Net income (loss) on discontinued operations, net of tax	$	13,479		$	(37,532	)	$	(194,451	)	$	(169,492	)

1 Included in Other income (expense), net for the three and nine months ended December 31, 2023 is a gain on deconsolidation of $12,417 and loss on deconsolidation of $9,820, respectively.

Investment in BioSteel Entities

Canopy Growth continues to have a 90.4% ownership interest in BioSteel Canada and 100% ownership interests in each of BioSteel US and BioSteel Manufacturing, but has deconsolidated the BioSteel Entities because it no longer has a controlling interest in them. Since the estimated amount of the liabilities of the BioSteel Entities exceeds the estimated fair value of the assets available for distribution to its creditors, the fair value of Canopy Growth's equity investment in the BioSteel Entities approximates zero.

Canopy Growth's Amounts Receivable from BioSteel Entities

Prior to Canopy Growth's deconsolidation of BioSteel Canada, Canopy Growth made significant secured loans to BioSteel Canada for purposes of funding its operations. The secured loans and corresponding interest were considered intercompany transactions and eliminated in Canopy Growth's consolidated financial statements prior to September 14, 2023, being the deconsolidation date. As of the deconsolidation date, the secured loans and corresponding interest are now considered related party transactions and have been recognized in Canopy Growth's consolidated financial statements at their estimated fair value of $29,000.

As of the deconsolidation date for BioSteel US and BioSteel Manufacturing, Canopy Growth has recorded remaining amounts legally receivable from BioSteel US and BioSteel Manufacturing at their estimated fair value.

The remaining amounts legally receivable from the BioSteel Entities are measured at their expected recoverable amounts. The assets and liabilities related to the BioSteel Entities business units are classified as discontinued operations and the major categories are as follows:


	December 31,		March 31,
	2023		2023
Cash	$	-	$	9,314
Short-term investments		-		69
Amounts receivable, net		-		25,528
Receivable from BioSteel Entities		29,401		-
Inventory		-		65,671
Prepaid expenses and other assets		-		15,709
Property, plant and equipment		-		28,195
Intangible assets		-		27,969
Other assets		-		405
Total assets of discontinued operations	$	29,401	$	172,860

Accounts payable		-		44,399
Other accrued expenses and liabilities		-		22,248
Other current liabilities		-		977
Deferred income tax liabilities		-		954
Other liabilities		-		2,463
Total liabilities of discontinued operations	$	-	$	71,041

5. LOSS ON ASSET IMPAIRMENT AND RESTRUCTURING ~~COSTS~~

In the year ended March 31, 2020, the Company commenced an organizational and strategic review of its business which resulted in several restructuring actions designed to improve organizational focus, streamline operations and align the Company’s production capability with projected demand. In the three months ended ~~June 30, 2020,~~December 31, 2023, the Company ~~completed certain~~recorded a loss on asset impairment and restructuring. The loss for the three months ended December 31, 2023 primarily relates to the This Works Divestiture (as defined below) as This Works was classified as held for sale and measured at its fair value less costs to sell which was lower than its carrying amount (refer to Note 27).

For the nine months ended December 31, 2023, the loss on asset impairment and restructuring was primarily related to: (i) the Company's divestiture of This Works; and (ii) various incremental impairment losses and other costs associated with the restructuring of the ~~restructuring actions~~Company's Canadian cannabis operations that ~~had commenced in the previous fiscal year, and recorded final adjustments related to changes in certain estimates recorded at March 31, 2020. In addition, the Company incurred additional costs~~were initiated in the three months ended ~~June 30, 2020, related primarily~~March 31, 2023. The loss on asset impairment and restructuring was partially offset by a gain on the sale of the Company's production facility at 1 Hershey Drive in Smiths Falls, Ontario. Such gain was due to the ~~rationalization of our marketing organization in~~sale proceeds exceeding the ~~current period.~~ carrying value that was previously impaired at March 31, 2023.

As a result, in the three and nine months ended ~~June 30, 2020,~~December 31, 2023, the Company recognized a loss on asset impairment and restructuring ~~costs~~ of ~~$12,794 in relation to (i) costs associated with the closure~~$30,413 and $2,452, respectively (three and nine months ended December 31, 2022 – loss of ~~certain of the Company’s Canadian production facilities; (ii) completing the exit of the Company’s operations in South Africa~~$22,259 and ~~Lesotho; and (iii) employee-related costs associated with rationalizing certain marketing activities.~~$1,794,212, respectively).

4.6. CASH AND CASH EQUIVALENTS

The components of cash and cash equivalents are as follows:


	June 30,		March 31,		December 31,		March 31,
	2020		2020		2023		2023
Cash	$	508,047	$	679,581	$	87,621	$	453,146
Cash equivalents		467,823		623,595		55,124		214,547
	$	975,870	$	1,303,176	$	142,745	$	667,693

7. SHORT-TERM INVESTMENTS

The components of short-term investments are as follows:

	June 30,		March 31,
	2020		2020		December 31,		March 31,
					2023		2023
Government securities					$	-	$	60,157
Term deposits	$	626,470	$	374,000		43,436		30,000
Government securities		195,789		226,087
Commercial paper and other		238,642		73,236		-		15,369
	$	1,060,901	$	673,323	$	43,436	$	105,526

The amortized cost of short-term investments at ~~June 30, 2020~~December 31, 2023 is ~~$1,060,890~~$43,436 (March 31, ~~2020~~2023 – ~~$673,022)~~$107,661).

6.8. AMOUNTS RECEIVABLE, NET

The components of amounts receivable, net are as follows:


	June 30,		March 31,		December 31,		March 31,
	2020		2020		2023		2023
Accounts receivable, net	$	42,222	$	51,166	$	50,957	$	41,292
Indirect taxes receivable						6,798		11,544
Interest receivable		14,215		10,303		360		3,966
Indirect taxes receivable		5,348		22,982
Other receivables		10,793		5,704		5,809		11,657
	$	72,578	$	90,155	$	63,924	$	68,459

Included in the accounts receivable, net balance at ~~June 30, 2020~~December 31, 2023 is an allowance for doubtful accounts of ~~$917~~$10,694 (March 31, ~~2020~~2023 – ~~$655)~~$8,554).

7.9. INVENTORY

The components of inventory are as follows:


	June 30,		March 31,		December 31,		March 31,
	2020		2020		2023		2023
Raw materials, packaging supplies and consumables	$	49,581	$	75,507	$	21,218	$	18,927
Work in progress		260,028		255,934		38,495		34,104
Finished goods		80,191		59,645		27,204		30,199
	$	389,800	$	391,086	$	86,917	$	83,230

In the three and nine months ended ~~June 30, 2020,~~December 31, 2023, the Company recorded write-downs related to inventory ~~of $19,386 (three months ended June 30, 2019~~ – ~~$4,789)~~in cost of goods ~~sold.~~sold of $859 and $8,362, respectively (three and nine months ended December 31, 2022 – $6,454 and $29,274, respectively).

The components of prepaid expenses and other assets are as follows:


	June 30,		March 31,		December 31,		March 31,
	2020		2020		2023		2023
Prepaid expenses	$	51,202	$	41,423	$	11,740	$	11,963
Deposits		18,752		7,773		2,202		1,522
Prepaid inventory		17,160		21,217		881		690
Other assets		11,248		14,681		8,759		10,115
	$	98,362	$	85,094	$	23,582	$	24,290

~~The following table presents changes in the Company’s investments in associates that are accounted for using the equity method in the three months ended June 30, 2020:~~

Where the Company does not have the same reporting date as its investees, the Company will account for its investment one quarter in arrears. Accordingly, certain of the figures in the above table, including the Company’s share of the investee’s net income (loss), are based on the investees’ results for the three months ended March 31, 2020 (with respect to June 30, 2020) with adjustments for any signficant transactions.

The following tables present current and non-current assets, current and non-current liabilities as well as revenues and net loss of the Company’s equity method investments as at and for the three months ended March 31, 2020:18

The following table outlines changes in other financial assets. Additional details on how the fair value of significant investments ~~are~~is calculated are included in Note ~~22.~~23.


									Foreign
		Balance at							currency						Balance at
		March 31,				Fair value			translation						December 31,
Entity	Instrument	2023		Additions		changes			adjustments			Other			2023
Acreage1	Fixed Shares option and Floating Shares agreement	$	55,382	$	-	$	(22,296	)	$	(86	)	$	-		$	33,000
TerrAscend Exchangeable Shares	Exchangeable shares		93,000		-		10,201			(2,201	)		-			101,000
TerrAscend - December 2022	Warrants		26,000				2,702			(702	)		-			28,000
TerrAscend	Option		1,600		-		138			(38	)		-			1,700
Wana	Option		239,078		-		(111,783	)		(3,755	)		(4,968	)		118,572
Jetty	Options		75,014		-		(27,243	)		(1,089	)		-			46,682
Acreage Hempco1	Debenture		29,262		-		(15,775	)		(112	)		(397	)		12,978
Acreage Debt Option Premium	Option		35,479		-		1,470			(730	)		-			36,219
Acreage Tax Receivable Agreement	Other		3,109		-		(2,399	)		(61	)		-			649
Other - at fair value through net income (loss)	Various		1,870		2,156		1,125			(27	)		-			5,124
Other - classified as held for investment	Loan receivable		8,498		-		-			-			(98	)		8,400
		$	568,292	$	2,156	$	(163,860	)	$	(8,801	)	$	(5,463	)	$	392,324

1 See Note 28 for information regarding the Acreage Amended Arrangement and Acreage Hempco.

For information regarding the Reorganization, Reorganization Amendments and Additional Reorganization Amendments, see Note 3. Following the implementation of the Reorganization, Canopy USA, as of October 24, 2022, holds an ownership interest in certain U.S. cannabis investments previously held by the Company, including, among others, interests in the Floating Shares of Acreage, Wana, Jetty, and TerrAscend.

Exercise of

Balance at

options /

Balance at

March 31,

Fair value

disposal

June 30,

Entity

Instrument

2020

Additions

changes

of shares

2020

TerrAscend Canada

Term loan / debenture

$
53,820

$
-

$
10,960

$
-

$
64,780

TerrAscend

Exchangeable shares

47,000

-

6,000

-

53,000

TerrAscend

Warrants

25,004

-

10,306

-

35,310

PharmHouse

Loan receivable

40,000

-

-

-

40,000

ZeaKal

Shares

14,186

-

(586
)

-

13,600

Agripharm

Royalty interest

12,600

-

900

-

13,500

Greenhouse

Convertible debenture

10,517

-

(17
)

-

10,500

Other - classified as fair value through net income (loss)

Various

22,495

481

(4,628
)

-

18,348

Other - elected as fair value through net income (loss)

Various

9,483

1,519

(1,128
)

-

9,874

Other - classified as held for investment

Loan receivable

14,148

600

-

(36
)

14,712

$
249,253

$
2,600

$
21,807

$
(36
)

$
273,624

~~11.~~12. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment are as follows:


	June 30,			March 31,			December 31,			March 31,
	2020			2020			2023			2023
Buildings and greenhouses	$	880,329		$	876,732		$	306,611		$	413,832
Production and warehouse equipment		287,002			300,666			70,990			76,760
Leasehold improvements		76,862			75,964			9,170			13,655
Land		71,355			65,003
Office and lab equipment		28,538			29,978			10,976			13,636
Computer equipment		31,844			30,744			8,331			8,521
Land								5,325			16,781
Right-of-use-assets
Buildings and greenhouses		148,743			169,754			33,126			35,167
Production and warehouse equipment		666			927
Assets in process		371,626			365,644			591			3,229
		1,896,965			1,915,412			445,120			581,581
Less: Accumulated depreciation		(388,297	)		(390,609	)		(104,641	)		(110,310	)
	$	1,508,668		$	1,524,803		$	340,479		$	471,271

Depreciation expense included in cost of goods sold for the three and nine months ended ~~June 30, 2020~~December 31, 2023 is ~~$14,786~~$5,091 and $19,589, respectively (three and nine months ended ~~June 30, 2019~~December 31, 2022 – ~~$9,316)~~$11,611 and $34,001, respectively). Depreciation expense included in selling, general and administrative expenses for the three and nine months ended ~~June 30, 2020~~December 31, 2023 is ~~$2,629~~$826 and $2,896, respectively (three and nine months ended ~~June 30, 2019~~December 31, 2022 – ~~$4,271)~~$1,509 and $8,673, respectively).

~~12.~~13. INTANGIBLE ASSETS

The components of intangible assets are as follows:


	June 30, 2020				March 31, 2020				December 31, 2023				March 31, 2023
	Gross		Net		Gross		Net		Gross		Net		Gross		Net
	Carrying		Carrying		Carrying		Carrying		Carrying		Carrying		Carrying		Carrying
	Amount		Amount		Amount		Amount		Amount		Amount		Amount		Amount
Finite lived intangible assets
Licensed brands	$	65,826	$	49,218	$	66,227	$	53,797
Intellectual property									$	82,378	$	40,603	$	98,383	$	56,333
Distribution channel		73,721		43,622		74,768		47,117		45,948		3,264		58,324		11,231
Health Canada and operating licenses		56,200		49,132		63,631		57,250
Intellectual property		220,142		190,843		240,386		215,044
Operating licenses										24,472		16,793		24,400		19,012
Software and domain names		24,238		17,966		16,056		10,013		32,199		8,355		34,177		14,579
Brands										15,490		12,324		16,253		13,249
Amortizable intangibles in process		4,083		4,083		9,590		9,590		195		195		508		508
Total		444,210		354,864		470,658		392,811	$	200,682	$	81,534	$	232,045	$	114,912

Indefinite lived intangible assets
Operating licenses			$	8,000			$	7,000
Acquired brands				81,335				76,555			$	37,538			$	45,838
Total intangible assets			$	444,199			$	476,366			$	119,072			$	160,750

Amortization expense included in cost of goods sold for the three and nine months ended ~~June 30, 2020~~December 31, 2023 is ~~$702~~$13 and $~~(three~~41, respectively (three and nine months ended ~~June 30, 2019~~December 31, 2022 – ~~$12)~~$16 and $45, respectively). Amortization expense included in selling, general and administrative expenses for the three and nine months ended ~~June 30, 2020~~December 31, 2023 is ~~$15,930~~$6,310 and $~~(three~~19,355, respectively (three and nine months ended ~~June 30, 2019~~December 31, 2022 – $6,172, and $18,013, respectively).

The changes in the carrying amount of goodwill are as follows:

Balance, March 31, 2019

$
1,489,859

Purchase accounting allocations

443,724

Finalization of S&B purchase price allocation

(24,990
)
Foreign currency translation adjustments

45,878

Balance, March 31, 2020

1,954,471

Foreign currency translation adjustments

(25,053
)
Balance, June 30, 2020

$
1,929,418


Balance, March 31, 2022	$	1,866,503
Disposal of consolidated entities		(227	)
Impairment losses		(1,785,080	)
Foreign currency translation adjustments		4,367
Balance, March 31, 2023	$	85,563
Foreign currency translation adjustments		(326	)
Balance, December 31, 2023	$	85,237

The Company does not believe that an event occurred or circumstances changed during the nine months ended December 31, 2023 that would, more likely than not, reduce the fair value of the Storz & Bickel reporting unit below its carrying value. Therefore, the Company concluded that the quantitative goodwill impairment assessment was not required for the Storz & Bickel reporting unit at December 31, 2023. The carrying value of goodwill associated with the Storz & Bickel reporting unit was $85,237 at December 31, 2023.

~~14.~~The Company is required to perform its next annual goodwill impairment analysis on March 31, 2024, or earlier should there be an event that occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

15. OTHER ACCRUED EXPENSES AND LIABILITIES

The components of other accrued expenses and liabilities are as follows:

	June 30,		March 31,
	2020		2020		December 31,		March 31,
Property, plant and equipment	$	2,576	$	1,173
					2023		2023
Employee compensation					$	17,147	$	27,322
Taxes and government fees						12,148		5,734
Professional fees		15,725		7,677		10,837		5,967
Employee compensation		41,036		33,415
Other		23,644		22,729		9,643		14,720
	$	82,981	$	64,994	$	49,775	$	53,743

~~15.~~16. DEBT

The components of debt are as follows:


		December 31,			March 31,
	Maturity Date	2023			2023
Unsecured senior notes at 4.25% interest with semi-annual interest payments	July 15, 2023
Principal amount		$	-		$	337,380
Accrued interest			-			3,148
Non-credit risk fair value adjustment			-			26,214
Credit risk fair value adjustment			-			(35,492	)
			-			331,250
Supreme convertible debentures	September 10, 2025		30,461			31,503
Accretion debentures	September 10, 2025		7,650			8,780
Credit facility	March 18, 2026		487,108			840,058
Equity-settled convertible debentures	February 28, 2028		-			93,228
Promissory note	December 31, 2024		85,486			-
Other revolving debt facility, loan, and financings			1,369			2,062
			612,074			1,306,881
Less: current portion			(91,336	)		(556,890	)
Long-term portion		$	520,738		$	749,991

~~Convertible~~

Credit Facility

On March 18, 2021, the Company entered into a term loan credit agreement (the "Credit Agreement") providing for a five-year, first lien senior ~~notes~~secured term loan facility in an aggregate principal amount of US$750,000 (the “Credit Facility”). The Company had the ability to obtain up to an additional US$500,000 of incremental senior secured debt pursuant to the Credit Agreement. On October

June 30,

March 31,

Maturity Date

2020

2020

Convertible senior notes at 4.25% interest with
   semi-annual interest payments

July 15, 2023

   Principal amount

$
600,000

$
600,000

Accrued interest

11,898

5,454

Non-credit risk fair value adjustment

(13,230
)

(27,120
)
Credit risk fair value adjustment

(112,770
)

(128,130
)

485,898

450,204

Transferred receivables, bearing interest rate of
   EURIBOR plus 0.850%

4,439

4,678

Other revolving debt facility, loan, and financings

10,069

10,533

500,406

465,415

Less: current portion

(22,570
)

(16,393
)
Long-term portion

$
477,836

$
449,022

24, 2022, the Company entered into agreements with certain of its lenders under the Credit Agreement pursuant to which the Company agreed to purchase in the aggregate US$187,500 of principal indebtedness outstanding under the Credit Facility at a discounted price of US$930 per US$1,000 or US$174,375 in the aggregate. The first payment, which was oversubscribed, in the amount of $117,528 (US$87,852) was made on November 10, 2022 to reduce the principal indebtedness under the Credit Facility by $126,324 (US$94,427). The second payment of $116,847 (US$87,213) was made on April 17, 2023 to reduce principal indebtedness under the Credit Agreement by $125,606 (US$93,750). Additionally, on October 24, 2022, the Company and certain of its lenders agreed to make certain amendments to the Credit Agreement which, among other things, resulted in: (i) a reduction to the minimum liquidity covenant to no less than US$100,000 following completion of the second principal repurchase on April 17, 2023; (ii) certain changes to the application of net proceeds from asset sales; (iii) the establishment of a new committed delayed draw term credit facility in an aggregate principal amount of US$100,000; and (iv) the elimination of the additional US$500,000 incremental term loan facility.

On July 13, 2023, as part of the Company's balance sheet deleveraging initiatives, the Company entered into agreements with certain of its lenders under the Credit Agreement pursuant to which certain additional amendments were made to the Credit Agreement (the Credit Agreement, as amended as of July 13, 2023, is referred to herein as the "Amended Credit Agreement"). The Amended Credit Agreement required the Company to prepay or repurchase principal indebtedness under the Credit Facility in an amount equal to the US dollar equivalent of $93,000 at a discounted price of US$930 per US$1,000 (the "July 2023 Paydown"). In addition, the Amended Credit Agreement requires the Company to apply certain net proceeds from asset sales to prepay or repurchase principal indebtedness under the Credit Facility and receive principal reductions at, in certain circumstances, a discounted price of US$950 per US$1,000. The Amended Credit Agreement also includes, among other things, amendments to the minimum liquidity covenant such that the US$100,000 minimum liquidity covenant ceased to apply concurrently with the July 2023 Paydown. The Company made the July 2023 Paydown on July 21, 2023.

On each of August 11, 2023 and September 14, 2023, pursuant to the terms of the Amended Credit Agreement, the Company repurchased additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales (the "Second Quarter 2024 Paydowns"). The Second Quarter 2024 Paydowns resulted in an aggregate principal reduction of $73,313 (US$54,491) for a cash payment of $69,647 (US$51,766).

On each of November 28, 2023 and December 27, 2023, pursuant to the terms of the Amended Credit Agreement, the Company repurchased and repaid, as applicable, additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales (the "Third Quarter 2024 Paydowns"). The Third Quarter 2024 Paydowns resulted in an aggregate principal reduction of $65,379 (US$48,532) for a cash payment of $63,167 (US$46,902).

The Amended Credit Facility continues to mature on March 18, 2026 and through December 26, 2023, had an interest rate of LIBOR + 8.50%. After December 26, 2023, interest on amounts outstanding under the Amended Credit Facility is calculated at either the applicable prime rate plus 7.50% per annum, subject to a prime rate floor of 2.00%, or adjusted term SOFR plus 8.50% per annum, subject to an adjusted term SOFR floor of 1.00%. The Company’s obligations under the Credit Facility are guaranteed by material wholly-owned Canadian and U.S. subsidiaries of the Company. The Credit Facility is secured by substantially all of the assets of the Company and its material wholly-owned Canadian and U.S. subsidiaries, including material real property. The Credit Agreement contains representations and warranties, and affirmative and negative covenants.

Unsecured Senior Notes

On June 20, 2018, the Company issued ~~convertible senior notes (the “notes”)~~the Canopy Notes with an aggregate principal amount of ~~$600,000.~~$600,000. The ~~notes bear~~Canopy Notes bore interest at a rate of ~~4.25%~~4.25% per annum, payable semi-annually on January 15th and July 15th of each year commencing from January 15, ~~2019.~~2019. The ~~notes will mature~~Canopy Notes matured on July 15, ~~2023.~~2023. The ~~notes are~~Canopy Notes were subordinated in right of payment to any existing and future senior ~~indebtedness, including indebtedness under the revolving credit facility.~~indebtedness. The ~~notes will rank~~Canopy Notes ranked senior in right of payment to any future subordinated borrowings. The ~~notes are~~Canopy Notes were effectively junior to any secured indebtedness and the ~~notes are~~Canopy Notes were structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries.

~~Holders~~

The Canopy Notes were issued pursuant to an indenture dated June 20, 2018, as supplemented on April 30, 2019 and June 29, 2022 (collectively, the “Canopy Notes Indenture”). As a result of the ~~notes may convert the notes at their option at any time from January 15, 2023~~supplement to the ~~maturity date. The notes will be convertible, at~~Canopy Notes Indenture dated June 29, 2022 (the “Second Supplemental Indenture”), the holder’s option, at a conversion rate of 20.7577 common shares for every $1 principal amount of notes (equal to an initial conversion price of approximately $48.18 per common share), subject to adjustments in certain events. In addition, the holder has theCompany irrevocably surrendered its right to ~~exercise~~settle the conversion ~~option from September 30, 2018 to January 15, 2023, if (i)~~of any Canopy Note with its common shares. As a result, had there been any conversions of Canopy Notes following the ~~market price~~execution of the Company common shares for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day, (ii) during the 5 business day period after any consecutive 5 trading day period (the “measurement period”)Second Supplemental Indenture these would have been settled entirely in ~~which the trading price per $1 principal~~cash, unless otherwise negotiated.

amount of the notes for each trading day in the measurement period was less than 98% of the product of the last reported sales price of the Company’s common shares and the conversion rate on each such trading day, (iii) the notes are called for redemption or (iv) upon occurrence of certain corporate events (“Fundamental Change”). A Fundamental Change occurred upon completion of the investment by Constellation Brands, Inc. (“CBI”) in November 2018, and no note holders surrendered any portion of their notes as at the repurchase date of December 5, 2018.

The Company may, upon conversion by the holder, elect to settle in either cash, common shares, or a combination of cash and common shares, subject to certain circumstances. Under the terms of the indenture if a Fundamental Change occurs and a holder elects to convert its notes from and including on the date of the Fundamental Change up to, and including, the business day immediately prior to the Fundamental Change repurchase date, the Company may be required to increase the conversion rate for the notes so surrendered for conversion by a number of additional common shares.

The Company cannot redeem the notes prior to July 20, 2021, except in the event of certain changes in Canadian tax law. On or after July 20, 2021, the Company could redeem for cash, subject to certain conditions, any or all of the notes, at its option, if the last reported sales price of the Company’s common shares for at least 20 trading days during any 30 consecutive trading day period ending within 5 trading days immediately preceding the date on which the Company provides notice of redemption exceeds 130% of the conversion price on each applicable trading day. The Company may also redeem the notes, if certain tax laws related to Canadian withholding tax change subject to certain further conditions. The redemption of notes in either case shall be at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

~~For accounting purposes, the equity conversion feature did not meet the equity classification guidance, therefore the Company elected the fair value option under ASC 825~~ –~~Fair Value Measurements. The notes~~Canopy Notes were initially recognized at fair value on the balance ~~sheet.~~sheet and continued to be recorded at fair value until their repayment. All ~~subsequent~~ changes in fair value following initial recognition, excluding the impact of the change in fair value related to the Company’s own credit risk, ~~are~~were recorded in other income ~~(expenses)~~(expense), net. The changes in fair value related to the Company’s own credit risk ~~are~~were recorded through other comprehensive income (loss).

~~The overall change in fair value of the notes during~~ During the three months ended June 30, ~~2020,~~2023, the Company entered into privately negotiated exchange agreements (the "June 2023 Exchange Agreements") with certain holders of the Canopy Notes (the "Noteholders"), pursuant to which the Company acquired and cancelled an aggregate principal amount of Canopy Notes of $12,500 in exchange for cash, including accrued and unpaid interest owing under such Canopy Notes, and the issuance of an aggregate 2,434,274 Canopy Growth common shares.

On July 13, 2023, the Company entered into privately negotiated redemption agreements (collectively, the "Redemption Agreements") with certain Noteholders of the Canopy Notes pursuant to which approximately $193,000 aggregate principal amount of the outstanding Canopy Notes held by such Noteholders were redeemed by the Company (the "Redemption") for: (i) a cash payment in the aggregate amount of approximately $101,000; (ii) the issuance of an aggregate of 9,043,092 Canopy Growth common shares; and (iii) the issuance of $40,380 aggregate principal amount of unsecured non-interest bearing convertible debentures (the "Debentures"). Following the Redemption, the Company settled the remaining aggregate principal amount owing under the outstanding Canopy Notes in cash and, as of the maturity date, there were no Canopy Notes outstanding.

The Debentures were issued pursuant to a debenture indenture dated July 14, 2023 between the Company and Odyssey Trust Company, in its capacity as trustee. The Debentures were convertible into Canopy Growth common shares (the “Debenture Shares”) at the option of the holder at any time or times following approval from the Company’s shareholders for the issuance of all of the Debenture Shares in excess of the Nasdaq threshold of 19.99% and the TSX requirements of 25%, of the issued and outstanding Canopy Growth common shares in accordance with the applicable rules and regulations of the Nasdaq and the TSX (the “Shareholder Approval”) until the maturity date of January 15, 2024, at a conversion price equal to $5.50, subject to adjustment in certain events.

The Company obtained Shareholder Approval at its Annual General and Special Meeting of shareholders held on September 25, 2023. As of September 30, 2023, all conversions pursuant to the Debentures had been completed and the amount outstanding under the Debentures was ~~an increase~~$nil.

The acquisition and cancellation of ~~$35,694 (three~~the Canopy Notes pursuant to the June 2023 Exchange Agreements, Redemption of the Canopy Notes and conversions of the Debentures each resulted in a release of accumulated other comprehensive income into other income (expense), net for the three and nine months ended ~~June 30, 2019 a decrease~~December 31, 2023 of ~~$46,056)~~$nil and $2,373, ~~which included contractual interest~~respectively. The related tax impact of ~~$6,444 (three~~$nil and $13,433, respectively, for the three and nine months ended ~~June 30, 2019, interest of $6,444).~~December 31, 2023, associated with the aggregate principal amount acquired and cancelled was also released from accumulated other comprehensive income into income tax expense. Refer to Note 2221.

On April 13, 2023, the Company entered into an exchange agreement (the “April 2023 Exchange Agreement”) with Greenstar in order to acquire and cancel $100,000 aggregate principal amount of the Canopy Notes. Pursuant to the April 2023 Exchange Agreement, the Company agreed to acquire and cancel $100,000 aggregate principal amount of the Canopy Notes held by Greenstar in exchange for: (i) a cash payment to Greenstar in the amount of the unpaid and accrued interest owing under the Canopy Notes held by Greenstar; and (ii) a promissory note (the “CBI Note”) issuable to Greenstar in the aggregate amount of $100,000 payable on December 31, 2024. The CBI Note bears interest at a rate of 4.25% per year, payable on maturity of the CBI Note. As a result, Greenstar no longer holds any Canopy Notes. At December 31, 2023, the estimated fair value of the CBI Note was $85,486, measured using a discounted cash flow model. See Note 23 for additional details on how the fair value of the ~~notes~~CBI Note is ~~calculated.~~calculated on a recurring basis.

~~Transferred receivables~~The overall change in fair value of the Canopy Notes during the three and nine months ended December 31, 2023 was a decrease of $nil and $331,250, respectively (three and nine months ended December 31, 2022 – an increase of $4,427 and a decrease of $238,403, respectively), which included contractual interest of $nil and $2,925, respectively (three and nine months ended December 31, 2022 – $3,583 and $13,370, respectively) and principal redemption of $nil and $337,380, respectively (three and nine months ended December 31, 2022 – $nil and $262,620, respectively). Upon redemption, the principal redeemed during the three and nine months ended December 31, 2023 had a fair value of $nil and $334,005, respectively (three and nine months ended December 31, 2022 – $nil and $225,369, respectively). Refer to Note 23 for additional details on how the fair value of the Canopy Notes were calculated.

Supreme Cannabis Convertible Debentures and Accretion Debentures

On October 19, 2018, The ~~carrying~~Supreme Cannabis Company, Inc. (“Supreme Cannabis”) entered into an indenture with Computershare Trust Company of Canada (the “Trustee”) pursuant to which Supreme Cannabis issued 6.0% senior unsecured convertible debentures (the “Supreme Debentures”) for gross proceeds of $100,000. On September 9, 2020, Supreme Cannabis and the Trustee entered into a supplemental indenture to effect certain amendments to the Supreme Debentures, which included among

other things: (i) the cancellation of $63,500 of principal amount of the ~~transferred receivables include receivables which are subject~~Supreme Debentures; (ii) an increase in the interest rate to 8% per annum; (iii) the extension of the maturity date to September 10, 2025; and (iv) a reduction in the conversion price to $2.85.

In addition, on September 9, 2020, Supreme Cannabis issued new senior unsecured non-convertible debentures (the “Accretion Debentures”). The principal amount began at $nil and accreted at a rate of 11.06% per annum based on the remaining principal amount of the Supreme Debentures of $36,500 to a ~~factoring arrangement. Under this agreement, C~~³ ~~Cannabinoid Compound~~maximum of $13,500, compounding on a semi-annual basis commencing on September 9, 2020, and ending on September 9, 2023. As of September 9, 2023, the principal amount of the Accretion Debentures was finalized as $10,434. The Accretion Debentures are payable in cash, but do not bear cash interest and are not convertible into the common shares of Supreme Cannabis (the “Supreme Shares”). The principal amount of the Accretion Debentures will amortize, or be paid, at 1.0% per month over the 24 months prior to maturity. During the three and nine months ended December 31, 2023 principal payments on Accretion Debentures totaled $1,500 and $2,000, respectively.

As a result of the completion of an arrangement on June 22, 2021 by the Company ~~(“C~~³~~”) has transferred~~and Supreme Cannabis, pursuant to which the ~~relevant receivables~~Company acquired 100% of the issued and outstanding Supreme Shares (the “Supreme Arrangement”), the Supreme Debentures remain outstanding as securities of Supreme Cannabis, which, upon conversion will entitle the holder thereof to ~~PB Factoring GmbH~~receive, in ~~exchange for cash. The transferred receivables~~lieu of the number of Supreme Shares to ~~PB Factoring GmbH are $4,342~~which such holder was theretofore entitled, the consideration payable under the Supreme Arrangement that such holder would have been entitled to be issued and receive if, immediately prior to the effective time of the Supreme Arrangement, such holder had been the registered holder of the number of Supreme Shares to which such holder was theretofore entitled.

In connection with the Supreme Arrangement, the Company, Supreme Cannabis and the ~~associated secured borrowing is $4,439.~~

~~Other revolving debt facility, loans, and financings~~

~~On August 13, 2019, the Company, through its wholly owned subsidiary, Tweed Farms Inc.,~~Trustee entered into a ~~$40,000 revolving debt facility~~supplemental indenture whereby the Company agreed to issue common shares upon conversion of any Supreme Debenture. In addition, the Company may force conversion of the Supreme Debentures outstanding with ~~Farm Credit Canada (“FCC”). The new facility replaces~~30 days’ notice if the ~~previous loans with FCC and is secured by~~daily volume weighted average trading price of the Company’s ~~property~~common shares is greater than $385.90 for any 10 consecutive trading days. The Company, Supreme Cannabis and the Trustee entered into a further supplemental indenture whereby the Company agreed to guarantee the obligations of Supreme Cannabis pursuant to the Supreme Debentures and the Accretion Debentures.

Prior to September 9, 2023, the Supreme Debentures were not redeemable. Beginning on and after September 9, 2023, Supreme Cannabis may from time to time, upon providing 60 days prior written notice to the Trustee, redeem the Convertible Debentures outstanding, provided that the Accretion Debentures have already been redeemed in ~~Niagara-on-the-Lake. The extinguishment of $4,912 in previous FCC debt resulted in no gain or loss.~~full.

~~The current outstanding balance of~~Convertible Debentures

On February 21, 2023, the ~~FCC debt facility is $5,268~~Company entered into a subscription agreement (the “Convertible Debenture Agreement”) with an ~~interest rate~~institutional investor (the “Institutional Investor”) pursuant to which the Institutional Investor agreed to purchase up to US$150,000 aggregate principal amount of ~~3.45%, or FCC prime rate plus 1.0%, and matures on September 3, 2024.~~

senior unsecured convertible debentures (“Convertible Debentures”) in a registered direct offering. The ~~revolving debt facility with FCC is secured by a first charge on~~Convertible Debentures were issued pursuant to the ~~properties in Niagara-on-the-Lake, Ontario, a corporate guarantee from~~indenture dated February 21, 2023 (the “Indenture”) between the Company and ~~a general corporate security agreement~~Computershare Trust Company of Canada, as trustee. Pursuant to the Convertible Debenture Agreement, an initial $.135,160 (US$100,000) aggregate principal amount of the Convertible Debentures was sold to the Institutional Investor on February 21, 2023. The conditions with respect to the remaining US$50,000 aggregate principal amount of the Convertible Debentures were neither satisfied nor waived.

In the three months ended June 30, 2023, $93,228 (US$72,800) in aggregate principal amount of the Convertible Debentures were converted for 8,445,894 Canopy Growth common shares. As of June 30, 2023, all conversions pursuant to the Convertible Debentures were completed and the amount outstanding under the Convertible Debentures was $nil.

17. OTHER LIABILITIES

The components of other liabilities are as follows:

As at June 30, 2020

As at March 31, 2020

Current

Long-term

Total

Current

Long-term

Total

Acquisition consideration
related liabilities

$
52,318

$
13,749

$
66,067

$
104,028

$
9,791

$
113,819

Lease liabilities

38,308

97,010

135,318

40,356

120,047

160,403

Minimum royalty obligations

11,437

49,043

60,480

9,368

50,445

59,813

Refund liability

8,433

-

8,433

17,586

-

17,586

Settlement liability

1,411

6,636

8,047

33,162

7,932

41,094

Other

12,850

1,801

14,651

11,309

2,445

13,754

$
124,757

$
168,239

$
292,996

$
215,809

$
190,660

$
406,469


	As at December 31, 2023						As at March 31, 2023
	Current		Long-term		Total		Current		Long-term		Total
Lease liabilities	$	14,020	$	67,176	$	81,196	$	28,421	$	78,367	$	106,788
Acquisition consideration and other investment related liabilities		19,473		94		19,567		25,945		30,323		56,268
Refund liability		5,618		-		5,618		6,434		-		6,434
Settlement liabilities and other		15,286		5,735		21,021		32,950		13,733		46,683
	$	54,397	$	73,005	$	127,402	$	93,750	$	122,423	$	216,173

The estimated deferred payments associated with the Wana financial instrument (the "Wana Deferred Payments") within acquisition consideration and other investment related liabilities at December 31, 2023 is $11,139 (March 31, 2023 – $26,370). See Note 23 for additional details on how the fair value of the Wana Deferred Payments is calculated on a recurring basis.

~~17.~~18. REDEEMABLE NONCONTROLLING INTEREST

The net changes in the redeemable noncontrolling interests are as follows:


	BioSteel			Total
As at March 31, 2023	$	-		$	-
Net income (loss) attributable to redeemable noncontrolling interest		(18,526	)		(18,526	)
Adjustments to redemption amount		18,526			18,526
As at December 31, 2023	$	-		$	-


	Vert Mirabel			BioSteel			Total
				(As Restated)
As at March 31, 2022	$	1,000		$	31,500		$	32,500
Net income (loss) attributable to redeemable noncontrolling interest		508			(22,523	)		(22,015	)
Adjustments to redemption amount		(508	)		2,699			2,191
Redemption of redeemable noncontrolling interest		-			(11,676	)		(11,676	)
As at December 31, 2022	$	1,000		$	-		$	1,000

In August 2023, the Company issued 1,520,605 common shares relating to its acquisition of the Vert Mirabel redeemable noncontrolling interest which had closed in March 2023.

Vert
Mirabel

BioSteel

Total

As at March 31, 2020

$
20,250

$
49,500

$
69,750

Loss attributable to noncontrolling interest

(9,253
)

(1,410
)

(10,663
)
Adjustments to redemption amount

18,803

3,710

22,513

As at June 30, 2020

$
29,800

$
51,800

$
81,600

~~There were0 equity financings during~~On September 18, 2023, the ~~three months ended June 30, 2020 (June 30, 2019 - 0ne)~~Company entered into subscription agreements (the "Subscription Agreements") with certain institutional investors (the "Investors"). Pursuant to the terms of the Subscription Agreements, the Company issued 2,292,947 units of the Company (the "Units") to the Investors at a price per Unit of US$10.90 for aggregate gross proceeds of $33,745 (US$25,000) (the "Unit Offering"). Each Unit is comprised of one Canopy Growth common share and one common share purchase warrant (a "Warrant"). Each Warrant entitles the holder to acquire one Canopy Growth common share at a price per share equal to US$13.50 for a period of five years from the date of issuance. The Unit Offering closed on September 19, 2023. The Investors also held an over-allotment option to acquire up to an additional 2,292,947 Units at a price per Unit of US$10.90 for aggregate gross proceeds of approximately US$25,000 at the discretion of the Investors at any time on or before November 2, 2023 (the "Over-Allotment Option"). The Over-Allotment Option was not exercised by the Investors and expired on November 2, 2023.

The gross proceeds from the Unit Offering were allocated to the Canopy Growth common shares, Warrants, and Over-Allotment Option based on their relative fair values.

During the ~~three~~nine months ended ~~June 30, 2020,~~December 31, 2023, the Company issued the following common shares, net of share issuance costs, as a result of business combinations, milestones being met, and other equity-settled transactions:

Number of shares

Share
capital

Share
based
reserve

Completion of acquisition milestones

751,922

$
12,079

$
(12,079
)
Other issuances

412,417

14,135

(14,719
)
Total

1,164,339

$
26,214

$
(26,798
)


	Number of common shares1		Share capital			Share based reserve
Settlement of Convertible Debentures		8,445,894	$	108,055		$	-
Settlement of Canopy Notes		11,477,366		57,084			-
Settlement of Debentures		7,341,818		87,754			-
Other issuances and share issue costs		6,165		(317	)		(80	)
Total		27,271,243	$	252,576		$	(80	)

1 Prior period share amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

During the ~~three~~nine months ended ~~June 30, 2019,~~December 31, 2022, the Company issued the following common shares, net of share issuance costs, as a result of business combinations, milestones being met, and other equity-settled transactions:

1 Prior year share amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

Number of
whole
warrants

Average
exercise
price

Warrant
value

Balance outstanding at March 31, 2020¹

146,299,443

$
52.44

$
2,638,951

Exercise of warrants

(18,876,901
)

12.98

(70,266
)
Balance outstanding at June 30, 2020¹

127,422,542

$
58.29

$
2,568,685


	Number of whole warrants2			Average exercise price		Warrant value
Balance outstanding at March 31, 20231		12,819,305		$	580.40	$	2,581,788
Issuance of warrants from private placement		2,292,947			18.33		8,977
Expiry of warrants		(12,692,731	)		583.62		-
Balance outstanding at December 31, 2023		2,419,521		$	30.34	$	2,590,765

1 This balance excludes the Tranche C Warrants (as defined below), which represent a derivative liability and have nominal value. See Note 28.

2 Prior period warrant amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

^{On November 1,} 2023, the Tranche A Warrants (as defined below) expired in accordance with their terms without having been exercised. In accordance with the terms of the Tranche B Warrants (as defined below) and Tranche C Warrants, the vesting of the remaining Tranche B Warrants and Tranche C Warrants, as applicable, is conditioned on the exercise, in full, of the Tranche A Warrants. Accordingly, the Tranche B Warrants and Tranche C Warrants are not, and will not become, exercisable and are considered expired as of November 1, 2023.


	Number of whole warrants2		Average exercise price		Warrant value
Balance outstanding at March 31, 20221		12,819,305	$	580.40	$	2,581,788
Expiry of warrants		-		-		-
Balance outstanding at December 31, 20221		12,819,305	$	580.40	$	2,581,788

1 This balance excludes the Tranche C Warrants, which represent a derivative liability and have nominal ~~value, see note 26.~~value. See Note 28.

2 Prior year warrant amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

Number of
whole
warrants

Average
exercise
price

Warrant
value

Balance outstanding at March 31, 2019

107,848,322

$
43.80

$
1,589,925

Tranche A warrant modification

-

-

1,049,153

Issuance of Tranche B warrants

38,454,444

76.68

-

Exercise of warrants

(12,060
)

35.36

(470
)
Balance outstanding at June 30, 2019¹

146,290,706

$
52.44

$
2,638,608

¹ ~~This balance excludes the Tranche C Warrants, which represent a derivative liability and have nominal value, see note 26.~~

Canopy Rivers Inc. (“Canopy Rivers”) is authorized to issue an unlimited number of Class A common shares designated as subordinated voting shares (the “Subordinated Voting Shares”) and unlimited number of Class B common shares designated as multiple voting shares (the “Multiple Voting Shares”). Each Subordinated Voting Share carries the right to one vote per share and each Multiple Voting Share carries the right to 20 votes per share at all meetings of the shareholders of Canopy Rivers. There is no priority or distinction between the two classes of shares in respect of their entitlement to the payment of dividends or participation on liquidation, dissolution or winding-up of Canopy Rivers.

As at June 30, 2020, Canopy Rivers had 36,468,318 Multiple Voting Shares (March 31, 2020 – 36,468,318) and 153,500,256 Subordinated Voting Shares (March 31, 2020 – 152,837,131) issued and outstanding. As at June 30, 2020, the Company held 36,468,318 Multiple Voting Shares (March 31, 2020 – 36,468,318) and 15,223,938 Subordinated Voting shares (March 31, 2020 – 15,223,938) which represented a 27.2% ownership interest in Canopy Rivers and 84.3% of the voting rights (March 31, 2020 – 27.3% and 84.4% respectively). The voting rights allow the Company to direct the relevant activities of Canopy Rivers such that the Company has control over Canopy Rivers and Canopy Rivers is consolidated in these financial statements.

~~There were 0 financings during the three months ended June 30, 2020, other than the release of shares related to share purchase financing as noted below.~~

10,066,668 Subordinated Voting Shares were acquired by certain employees of the Company and another individual by way of share purchase loans, whereby funds were advanced to Canopy Rivers by the Company on behalf of such individuals. These Subordinated Voting Shares were initially accounted for as seed capital options and are not considered issued for accounting purposes until the loans are repaid on an individual employee/consultant basis. During the three months ended June 30, 2020, share purchase loans in the amount of $32 (three months ended June 30, 2019 – $19) relating to Canopy Rivers shares held in trust by the Company on behalf of certain Canopy Growth employees were repaid, resulting in the release from escrow of 638,891 Subordinated Voting Shares (three months ended June 30, 2019 – 377,775). As at June 30, 2020, there were 2,166,669 seed capital options outstanding (March 31, 2020 – 2,805,560). Please refer to Note 19 for additional details on the seed capital options

On April 2, 2020, Canopy Rivers received approval from the Toronto Stock Exchange (“TSX”) to commence a normal course issuer bid (“NCIB”) to purchase up to 10,409,961 Subordinated Voting Shares, representing 10% of Canopy Rivers’ issued and outstanding Subordinated Voting Shares, in the open market or as otherwise permitted by the TSX, subject to the normal terms and limitations of such bids. The NCIB will expire on April 1, 2021.

Daily purchases are limited to 70,653 Subordinating Voting Shares, representing 25% of the average daily trading volume on the TSX over a specified period. The NCIB may be utilized at the sole discretion of Canopy Rivers, with no contractual obligation to purchase any specified number of shares. All Subordinated Voting Share purchases made by Canopy Rivers under the NCIB will be funded out of Canopy Rivers’ working capital and will be cancelled immediately.

During the three months ended June 30, 2020, Canopy Rivers repurchased and cancelled a total of 109,100 Subordinated Voting Shares under the NCIB program for $125, at a weighted average acquisition price of $1.14 per share (three months ended June 30, 2019 – not applicable).

~~Canopy Growth's eligible employees participate in a share-based compensation plan as noted below.~~

On September ~~15, 2017,~~25, 2023, the Company's shareholders approved ana new Omnibus Equity Incentive Plan ~~(as amended and restated, the “Omnibus Plan”~~(the "Omnibus Equity Incentive Plan") pursuant to which the Company can issue share-based long-term incentives. OnThe Omnibus Equity Incentive Plan replaces the Company’s previous equity incentive plan, which was originally approved by the Company’s shareholders on July 30, 2018 ~~shareholders~~(the “Previous Equity Incentive Plan”). The approval of the ~~Company approved certain amendments to~~Omnibus Equity Incentive Plan and replacement of the ~~Omnibus~~Previous

Equity Incentive Plan are detailed in ~~order to increase~~ the ~~maximum number of shares issuable under~~Company’s annual definitive proxy statement filed with the ~~Omnibus Plan.~~ Securities and Exchange Commission on August 9, 2023.

All directors, ~~officers,~~ employees and ~~independent contractors~~consultants of the Company are eligible to receive awards of common share purchase options (“Options”), restricted share units (“RSUs”), ~~performance share units (“PSUs”),~~ deferred share units ~~stock appreciation rights (“Stock Appreciation Rights”), performance awards (“Performance Awards”)~~ or ~~other stock based~~shares-based awards (collectively, the “Awards”) under the Omnibus ~~Plan. In addition, shareholders also approved~~Equity Incentive Plan, subject to certain limitations. The Omnibus Equity Incentive Plan allows for a maximum term of each Option to be ten years from the ~~2017 Employee Stock Purchase Plan~~date of ~~the Company (the “Purchase Plan”).~~

~~Under the Omnibus Plan,~~grant and the maximum number of common shares ~~issuable from treasury pursuant to Awards shall not exceed 15%~~available for issuance under the Omnibus Equity Incentive Plan remains at 10% of the ~~total~~issued and outstanding common shares from time to time, less the number of common shares issuable pursuant to ~~all~~ other security-based compensation arrangements of the ~~Company.~~ Company (including common shares reserved for issuance under the Previous Equity Incentive Plan).

The Omnibus Equity Incentive Plan was adopted on September 25, 2023. No further awards will be granted under the Previous Equity Incentive Plan and any new Awards will be issued by the Company pursuant to the terms of the Omnibus Equity Incentive Plan. However, outstanding and unvested awards granted under the Previous Equity Incentive Plan will continue to be governed in accordance with the terms of such plan.

The maximum number of common shares reserved for Awards is ~~55,629,846~~8,293,196 at ~~June 30, 2020.~~December 31, 2023. As of ~~June 30, 2020,~~December 31, 2023, the only Awards issued have been Options, RSUs and ~~PSUs~~performance share units ("PSUs") under the Previous Equity Incentive Plan, and Options and RSUs under the Omnibus Equity Incentive Plan.

The Omnibus Equity Incentive Plan is administered by the ~~Board of Directors~~Corporate Governance, Compensation and Nominating Committee of the ~~Company who~~Board (the “CGC&N Committee”) which establishes in its discretion, among other things, exercise prices, at not less than the ~~market price~~Fair Market Value (as defined in the Omnibus Equity Incentive Plan) at the date of grant, vesting terms and expiry ~~dates. Options under the Omnibus Plan generally become exercisable in increments with~~ dates (set at up to ~~1/3~~ten years ~~being exercisable on each of the first, second and third anniversaries~~ from ~~the date of grant, with expiry dates set at six years from issuance. The Board of Directors of the Company has the discretion to amend general vesting provisions and the term of any award,~~issuance) for Awards, subject to the limits contained in the Omnibus Equity Incentive Plan.

Under the Company’s Employee Share Purchase Plan (the “Purchase Plan”) the aggregate number of common shares that may be issued is ~~400,000,~~60,000, and the maximum number of common shares which may be issued in any one fiscal year shall not exceed ~~200,000. As of June 30, 2020, 0~~30,000. For the three and nine months ended December 31, 2023, nil and 6,426 common shares ~~have been~~were issued under the Purchase ~~Plan.~~Plan (three and nine months ended December 31, 2022 – nil and 23,780). The Purchase Plan concluded in August 2023 as all of the common shares available have been purchased and the Company does not currently intend to reinstate the Purchase Plan at this time.

The following is a summary of the changes in the Options outstanding ~~under the Omnibus Plan~~ during the ~~three~~nine months ended ~~June 30, 2020:~~December 31, 2023:


	Options issued1			Weighted average exercise price1
Balance outstanding at March 31, 2023		1,375,089		$	271.20
Options granted		2,438,257			6.22
Options exercised		(643	)		0.60
Options forfeited		(782,151	)		188.33
Balance outstanding at December 31, 2023		3,030,552		$	80.00

1 Prior period options and exercise price amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

The following is a summary of the Options outstanding as at ~~June 30, 2020:~~December 31, 2023:

Options Outstanding

Options Exercisable

Range of Exercise Prices

Outstanding at
June 30, 2020

Weighted Average
Remaining
Contractual Life
(years)

Exercisable at
June 30, 2020

Weighted Average
Remaining
Contractual Life
(years)

$0.06 - $24.62

5,494,833

3.37

3,415,917

2.74

$24.63 - $35.00

5,944,019

4.65

1,618,363

3.65

$35.01 - $36.80

5,941,004

4.33

2,589,127

4.12

$36.81 - $42.84

5,224,455

4.22

2,424,909

4.00

$42.85 - $67.64

6,287,737

4.65

1,511,022

4.44

28,892,048

4.26

11,559,338

3.67


	Options Outstanding				Options Exercisable
			Weighted Average				Weighted Average
			Remaining				Remaining
	Outstanding at		Contractual Life		Exercisable at		Contractual Life
Range of Exercise Prices1	December 31, 20231		(years)		December 31, 20231		(years)
$0.60 - $7.50		2,126,514		5.49		1,971		0.58
$7.51 - $56.10		284,535		4.61		98,291		4.55
$56.11 - $676.40		619,503		1.48		495,814		1.30
		3,030,552		4.58		596,076		1.83

1 Prior period Options and exercise price amounts have been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

At ~~June 30, 2020,~~December 31, 2023, the weighted average exercise price of the Options outstanding and Options exercisable was ~~$35.04~~$80.00 and ~~$31.60,~~$321.19, respectively (March 31, ~~2020~~2023 – ~~$34.89~~$271.20 and ~~$31.84,~~$372.80, respectively).

The Company recorded ~~$22,328~~$2,671 and $7,637 in share-based compensation expense related to Options and Purchase Plan shares issued to employees and contractors for the three and nine months ended ~~June 30, 2020~~December 31, 2023, respectively (three and nine months ended ~~June 30, 2019~~December 31, 2022 – ~~$73,093)~~$1,790 and $5,175, respectively). The share-based compensation expense for the ~~three~~nine months ended ~~June 30, 2020~~December 31, 2023, includes an amount related to ~~2,060,068~~107,874 Options being provided in exchange for services which are subject to performance conditions (for the ~~three~~nine months ended ~~June 30, 2019~~ December 31, 2022 – –107,874 ~~595,000)~~).

The Company uses the Black-Scholes option pricing model to establish the fair value of Options granted during the three months ended ~~June 30, 2020~~December 31, 2023 and ~~2019,~~2022, on their measurement date by applying the following assumptions:

1 Prior year Option value has been retrospectively adjusted to reflect the Share Consolidation, which became effective on December 15, 2023. See Note 2 for details.

Volatility was estimated by using the historical volatility of the Company. The expected life in years represents the period of time that Options granted are expected to be outstanding. The risk-free rate was based on zero coupon Canada government bonds with a remaining term equal to the expected life of the Options.

~~During the three months ended June 30, 2020, 711,472 Options were exercised ranging in price from $1.32 to $27.99 for gross proceeds of $4,722 (for the three months ended June 30, 2019~~ – ~~1,713,592 Options were exercised ranging in price from $0.22 to $40.68 for gross proceeds of $16,077).~~

For the three and nine months ended ~~June 30, 2020,~~December 31, 2023, the Company recorded ~~$3,842~~$1,022 and $2,490, respectively in share-based compensation expense related to ~~these~~ RSUs and PSUs (for the three and nine months ended ~~June 30, 2019~~December 31, 2022 – ~~$1,394)~~$4,265 and $15,718, respectively).

The following is a summary of the changes in the Company’s RSUs and PSUs during the ~~three~~nine months ended ~~June 30, 2020:~~December 31, 2023:


	Number of RSUs and PSUs1
Balance outstanding at March 31, ~~2020~~2023		~~883,009~~258,322
RSUs and PSUs granted		1,539,859
RSUs and PSUs released		(115,968	)
RSUs and PSUs cancelled and forfeited		(~~50,871~~281,023	)
Balance outstanding at ~~June 30, 2020~~December 31, 2023		~~832,138~~1,401,190

~~Share-based compensation expense related to acquisition milestones is comprised of:~~

Three months ended

June 30,

June 30,

2020

2019

Canindica

$
598

$
4,010

Spectrum Colombia

-

2,259

Other

2,372

4,012

$
2,970

$
10,281

During the three months ended June 30, 2020, 751,922 common shares (during the three months ended June 30, 2019 – 482,321) were released on completion of acquisition milestones. At June 30, 2020, there were up to 4,090,709 common shares to be issued on the completion of acquisition1 Prior period amounts for RSUs and asset purchase milestones. In certain cases, the number of common shares to be issued is based on the volume weighted average share price at the time the milestones are met. The number of common shares has been estimated assuming the milestones were met at June 30, 2020. The number of common shares excludes common shares that are to be issued on July 4, 2023PSUs (granted pursuant to the ~~previous shareholders of Spectrum Colombia S.A.S. (“Spectrum Colombia”) and Canindica Capital Ltd. (“Canindica”) based~~Previous Equity Incentive Plan) have been retrospectively adjusted to reflect the Share Consolidation, which became effective on ~~the fair market value of the Company’s Latin American business on that date.~~December 15, 2023. See Note 2 for details.

~~BioSteel share-based payments~~

On October 1, 2019, the Company purchased 72% of the outstanding shares of BioSteel Sports Nutrition Inc. (“BioSteel”). BioSteel has a stock option plan under which non-transferable options to purchase common shares of BioSteel may be granted to directors, officers, employees, or independent contractors of the BioSteel. As at June 30, 2020, BioSteel had 1,014,000 (March 31, 2020 – 1,008,000) options outstanding which vest in equal tranches over a 5-year period. In determining the amount of share-based compensation related to these options, BioSteel used the Black-Scholes option pricing model to establish the fair value of options on their measurement date. The Company recorded $244 (three months ended June 30, 2019 – $nil) of share-based compensation expense related to the BioSteel options during the three months ended June 30, 2020 with a corresponding increase in noncontrolling interest.

~~Seed Capital Options~~

On May 12, 2017, seed capital options were issued. These seed capital options consisted of 10,066,668 shares that were issued by way of share purchase loans. Since they were issued through loans, they are not considered issued for accounting purposes until the loan is repaid. The seed capital options were measured at fair value on May 12, 2017, using a Black-Scholes option pricing model and will be expensed over their vesting period. Where there are performance conditions in addition to service requirements Canopy Rivers has estimated the number of shares it expects to vest and is amortizing the expense over the expected vesting period.

Seed capital options issued

Seed capital loan balance

Balance outstanding at March 31, 2020

2,805,560

$
140

Options exercised

(638,891
)

$
(32
)
Balance outstanding at June 30, 2020

2,166,669

$
108

Canopy Rivers has a stock option plan (the “Option Plan”) under which non-transferable options to purchase Subordinated Voting Shares of the Company may be granted to directors, officers, employees, or independent contractors of Canopy Rivers. Pursuant to the Option Plan, the maximum number of Subordinated Voting Shares issuable from treasury pursuant to outstanding options shall not exceed 10% of the issued and outstanding Subordinated Voting Shares and Multiple Voting Shares, on an aggregate basis. The Option Plan is administered by the Board of Directors of Canopy Rivers who establishes exercise prices, at not less than the market price at the date of the grant, and expiry dates. Options under the Option Plan generally become exercisable in increments, with one-third being exercisable on each of the first, second, and third anniversaries from the date of grant, and have expiry dates five years from the date of grant. The Board of Directors of Canopy Rivers has the discretion to amend general vesting provisions and the term of any option grant, subject to limits contained in the Option Plan. The seed capital options are not within the scope of the Option Plan.

~~The following is a summary of the changes in Canopy Rivers’ stock options, excluding the seed capital options presented separately, during the three months ended June 30, 2020:~~

Options
issued

Weighted
average
exercise price

Balance outstanding at March 31, 2020

13,066,004

$
2.31

Options granted

-

-

Options exercised

(100,000
)

0.60

Options expired

(30,000
)

3.50

Options forfeited/cancelled

(218,334
)

2.26

Balance outstanding at June 30, 2020

12,717,670

$
2.32

In determining the amount of share-based compensation related to options issued during the year, Canopy Rivers used the Black-Scholes option pricing model to establish the fair value of options granted during the three months ended June 30, 2020 and 2019, on their measurement date by applying the following assumptions:

June 30,

June 30,

2020

2019

Risk-free interest rate

-

1.35%

Expected life of options (years)

-

3 - 4

Expected volatility

-

70%

Expected forfeiture rate

-

nil

Expected dividend yield

-

nil

Black-Scholes value of each option

-

$1.93

Volatility was estimated using companies that Canopy Rivers considers comparable that have trading and volatility history prior to Canopy Rivers becoming public. The expected life in years represents the period of time that options granted are expected to be outstanding. The risk-free rate was based on zero coupon Canada government bonds with a remaining term equal to the expected life of the options.

For the three months ended June 30, 2020, the Company recorded $1,184 (three months ended June 30, 2019 – $2,594) in share-based compensation expense related to these options and the seed capital options with a corresponding increase to noncontrolling interests.

~~In the three months ended June 30, 2020, Canopy Rivers granted $225 (three months ended June 30, 2019 – $nil) worth of RSUs which vest over a~~ ~~one-year~~ ~~period. For the three months ended June 30, 2020, the Company recorded $117 (three months ended June 30, 2019 – $nil) of share-based compensation expense related to these RSUs.~~

~~20.~~21. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income includes the following components:


	Foreign currency translation adjustments			Changes of own credit risk of financial liabilities			Accumulated other comprehensive income (loss)
As at March 31, 2023		(30,261	)		16,401			(13,860	)
Settlement of unsecured senior notes, net of deferred income tax		-			11,060			11,060
Other comprehensive (loss) income		575			(13,824	)		(13,249	)
As at December 31, 2023	$	(29,686	)	$	13,637		$	(16,049	)


	Foreign currency translation adjustments			Changes of own credit risk of financial liabilities			Accumulated other comprehensive income (loss)
As at March 31, 2022	$	(57,468	)	$	15,186		$	(42,282	)
Settlement of unsecured senior notes, net of deferred income tax		-			(29,507	)		(29,507	)
Other comprehensive income		24,694			32,847			57,541
As at December 31, 2022	$	(32,774	)	$	18,526		$	(14,248	)

Foreign currency translation adjustments

Changes of own credit risk of financial liabilities

Accumulated other comprehensive income (loss)

As at March 31, 2019

$
41,225

$
(47,130
)

$
(5,905
)
Other comprehensive (loss) income

(60,744
)

14,610

(46,134
)
As at June 30, 2019

$
(19,519
)

$
(32,520
)

$
(52,039
)

The net change in the noncontrolling interests is as follows:

Canopy
Rivers

Vert
Mirabel

BioSteel

Other non-
material
interests

Total

As at March 31, 2020

$
211,086

$
7,132

$
489

$
3,051

$
221,758

Comprehensive loss

(3,883
)

(14,528
)

(1,410
)

-

(19,821
)
Net loss attributable to redeemable
noncontrolling interest

-

9,253

1,410

-

10,663

Share-based compensation

1,301

-

244

-

1,545

Ownership changes

852

-

-

-

852

Warrants

250

-

-

-

250

As at June 30, 2020

$
209,606

$
1,857

$
733

$
3,051

$
215,247


	BioSteel			Other			Total
As at March 31, 2023		1,447			140			1,587
Comprehensive loss		(18,526	)		-			(18,526	)
Net loss attributable to redeemable noncontrolling interest		18,526			-			18,526
Share-based compensation		148			-			148
Ownership changes		(1,595	)		(1	)		(1,596	)
As at December 31, 2023	$	-		$	139		$	139


	Vert Mirabel			BioSteel			Other non- material interests			Total
				(As Restated)
As at March 31, 2022	$	-		$	2,497		$	1,844		$	4,341
Comprehensive income (loss)		508			(22,523	)		(1,844	)		(23,859	)
Net (income) loss attributable to redeemable noncontrolling interest		(508	)		22,523			-			22,015
Share-based compensation		-			495			-			495
Ownership changes		-			-			1,356			1,356
Redemption of redeemable noncontrolling interests, net		-			(1,552	)		-			(1,552	)
As at December 31, 2022	$	-		$	1,440		$	1,356		$	2,796

Canopy
Rivers

Vert
Mirabel

Other non-
material
interests

Total

As at March 31, 2019

$
280,012

$
2,422

$
3,051

$
285,485

Comprehensive (loss) income

(12,431
)

4,249

-

(8,182
)
Net income attributable to redeemable
noncontrolling interest

-

(2,715
)

-

(2,715
)
Share-based compensation

2,594

-

-

2,594

Ownership changes

236

-

-

236

As at June 30, 2019

$
270,411

$
3,956

$
3,051

$
277,418

Fair value measurements are made using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value:

The fair value measurement is categorized in its entirety by reference to its lowest level of significant input.

The Company records cash, accounts receivable, interest receivable and accounts payable, and other accrued expenses and liabilities at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis may include items such as property, plant and equipment, goodwill and other intangible assets, equity and other investments and other assets. ~~We determine~~The Company determines the fair value of these items using Level 3 inputs, as described in the related sections below.

The following table represents ~~our~~the Company's financial assets and liabilities measured at estimated fair value on a recurring basis:


	Fair value measurement using
	Quoted		Significant
	prices in		other		Significant
	active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
December 31, 2023
Assets:
Short-term investments	$	43,436	$	-	$	-	$	43,436
Restricted short-term investments		7,275		-		-		7,275
Other financial assets		3,613		-		380,311		383,924
Liabilities:
Long-term debt		-		-		85,486		85,486
Other liabilities		-		-		11,139		11,139

March 31, 2023
Assets:
Short-term investments	$	105,526	$	-	$	-	$	105,526
Restricted short-term investments		11,765		-		-		11,765
Other financial assets		269		-		559,525		559,794
Liabilities:
Unsecured senior notes		-		331,250		-		331,250
Other liabilities		-		-		29,952		29,952

Fair value measurement using

Quoted prices

Significant

prices in

other

Significant

active

observable

unobservable

markets

inputs

inputs

(Level 1)

(Level 2)

(Level 3)

Total

June 30, 2020

Assets:

Short-term investments

$
1,060,901

$
-

$
-

$
1,060,901

Restricted short-term investments

16,436

-

-

16,436

Other financial assets

1,602

55

217,257

218,914

Liabilities:

Convertible senior notes

-

485,898

-

485,898

Liability arising from Acreage Arrangement

-

-

285,000

285,000

Warrant derivative liability

-

-

287,122

287,122

March 31, 2020

Assets:

Short-term investments

$
673,323

$
-

$
-

$
673,323

Restricted short-term investments

21,539

-

-

21,539

Other financial assets

2,596

36

192,473

195,105

Liabilities:

Convertible senior notes

-

450,204

-

450,204

Liability arising from Acreage Arrangement

-

-

250,000

250,000

Warrant derivative liability

-

-

322,491

322,491

The following table summarizes the valuation techniques and significant unobservable inputs in the fair value measurement of significant level 2 financial instruments:

The following table summarizes the valuation techniques and significant unobservable inputs in the fair value measurement of significant level 3 financial instruments:


Financial asset / financial liability	Valuation techniques		Significant unobservable inputs	Relationship of unobservable inputs to fair value
Acreage financial instrument	Probability weighted expected return ~~model~~		Probability of each scenario	Change in probability of occurrence in each scenario will result in a change in fair value
	model	~~Value and number~~	Number of common shares to be issued	Increase or decrease in value and number of common shares will result in a decrease or increase in fair value
			Intrinsic value of Acreage	Increase or decrease in intrinsic value will result in an increase or decrease in fair value
			Probability and timing of US legalization	Increase or decrease in probability of US legalization will result in an increase or decrease in fair value
			Estimated premium on US legalization	Increase or decrease in estimated premium on US legalization will result in an increase or decrease in fair value
		~~Control premium~~	Control premium	Increase or decrease in estimated control premium will result in an increase or decrease in fair value
		~~Synergy value to Canopy Growth~~	Market access premium	Increase or decrease in estimated ~~synergy value to Canopy Growth~~market access premium will result in an increase or decrease in fair value



TerrAscend ~~exchangeable shares~~Exchangeable Shares, TerrAscend Option		Put option pricing model		Probability and timing of US legalization		Increase or decrease in probability of US legalization will result in an increase or decrease in fair value
~~TerrAscend warrants~~	Hempco Debenture	~~Monte Carlo simulation model~~	Discounted cash flow		Discount rate		Increase or decrease in discount rate will result in a decrease or increase in fair value
	TerrAscend warrants - December 2022		Black-Sholes option pricing model		Probability and timing of US legalization		Increase or decrease in probability of US legalization will result in an increase or decrease in fair value
~~TerrAscend Canada term loan~~	Wana financial instrument - Call		Discounted cash flow		Expected future Wana cash flows		Increase or decrease in expected future Wana cash flows will result in an increase or decrease in fair value
	Options				Discount rate		Increase or decrease in discount rate will result in a decrease or increase in fair value
	Wana financial instrument - Deferred Payments		Monte Carlo simulation model		Probability and timing of US legalization		Increase or decrease in probability of US legalization will result in an increase or decrease in fair value
~~ZeaKal shares~~		~~Market approach~~		~~Share price~~	Volatility of Wana equity		Increase or decrease in ~~share price~~volatility will result in an increase or decrease in fair value
~~Greenhouse convertible debenture~~	Jetty financial instrument -	~~FinCAD model~~	Discounted cash flow	~~Share price~~	Expected future Jetty cash flows		Increase or decrease in ~~share price~~expected future Jetty cash flows will result in an increase or decrease in fair value
~~Agripharm royalty interest and repayable debenture~~	Call Options	~~Discounted cash flow~~		~~Discount rate~~	Discount rate		Increase or decrease in discount rate will result in a decrease or increase in fair value
	Jetty financial instrument - Deferred Payments		Monte Carlo simulation model	~~Future royalties~~	Probability and timing of US legalization		Increase or decrease in ~~future royalties to be paid~~probability of US legalization will result in an increase or decrease in fair value
~~Warrant derivative liability~~		~~Monte Carlo simulation model~~			Volatility of ~~common share price~~Jetty equity and revenue		Increase or decrease in volatility will result in an increase or decrease in fair value
	CBI promissory note			~~Expected life~~		~~Increase or decrease in expected life will result in an increase or decrease in fair value~~
~~BioSteel redeemable noncontrolling interest~~		Discounted cash flow		Discount rate		Increase or decrease in discount rate will result in a decrease or increase in fair value
	BioSteel redeemable noncontrolling			~~Future wholesale price and production levels~~		~~Increase or decrease in future wholesale price and production levels will result in an increase or decrease in fair value~~
~~Vert Mirabel redeemable noncontrolling interest~~		Discounted cash flow		Discount rate		Increase or decrease in discount rate will result in a decrease or increase in fair value
	interest			~~Future wholesale price and production levels~~	Expected future BioSteel cash flows		Increase or decrease in expected future ~~wholesale price and production levels~~BioSteel cash flows will result in an increase or decrease in fair value
	Acreage Debt Option Premium		Monte Carlo simulation model		Volatility of Acreage share price		Increase or decrease in volatility will result in a decrease or increase in fair value
	Acreage Tax Receivable		Discounted cash flow		Discount rate		Increase or decrease in discount rate will result in a decrease or increase in fair value
	Agreement		Probability-weighted expected return		Probability of each scenario		Change in probability of occurrence in each scenario will result in a change in fair value
			model		Probability and timing of US legalization		Increase or decrease in probability of US legalization will result in an increase or decrease in fair value

~~During the three months ended June 30, 2020 and June 30, 2019, there were 0 transfers of amounts between levels~~.

24. REVENUE

Revenue is ~~dissaggregated~~disaggregated as follows:

Three months ended

June 30,

June 30,

2020

2019

Recreational cannabis revenue

Business to business

$
42,180

$
50,425

Business to consumer

9,330

10,638

Medical cannabis revenue

Canadian

15,336

13,051

International

20,191

10,496

Other revenue

32,051

18,781

Gross revenue

119,088

103,391

Excise taxes

8,672

12,909

Net revenue

$
110,416

$
90,482


	Three months ended				Nine months ended
	December 31,		December 31,		December 31,		December 31,
	2023		2022		2023		2022
Canada cannabis
Canadian adult-use cannabis
Business-to-business1	$	23,386	$	21,522	$	71,591	$	73,379
Business-to-consumer		-		11,036		-		36,243
		23,386		32,558		71,591		109,622
Canadian medical cannabis2		15,642		14,059		45,043		41,714
	$	39,028	$	46,617	$	116,634	$	151,336

Rest-of-world cannabis	$	10,527	$	5,846	$	29,666	$	30,179
Storz & Bickel	$	18,453	$	20,214	$	48,517	$	49,351
This Works	$	8,165	$	8,289	$	21,256	$	20,677
Other		2,332		3,884		8,285		13,475

Net revenue	$	78,505	$	84,850	$	224,358	$	265,018

1Canadian adult-use business-to-business net revenue during the three and nine months ended December 31, 2023 reflects excise taxes of $9,741 and $31,596, respectively (three and nine months ended December 31, 2022 – $10,797 and $33,754, respectively).

2Canadian medical cannabis net revenue for the three and nine months ended December 31, 2023 reflects excise taxes of $1,815 and $4,827, respectively (three and nine months ended December 31, 2022 – $1,339 and $3,625, respectively).

The Company recognizes variable consideration related to estimated future product returns and price adjustments as a reduction of the transaction price at the time revenue for the corresponding product sale is recognized. Net revenue reflects actual returns and variable consideration related to estimated returns and price adjustments in the amount of ~~$3,400~~$1,430 and $2,937 for the three and nine months ended ~~June 30, 2020~~December 31, 2023, respectively (three and nine months ended ~~June 30, 2019~~December 31, 2022 – ~~$8,000)~~$5,684 and $7,788, respectively). As of ~~June 30, 2020,~~December 31, 2023, the liability for estimated returns and price adjustments was ~~$8,433~~$5,618 (March 31, ~~2020~~2023 – ~~$17,586)~~$6,434).

~~24.~~25. OTHER INCOME (EXPENSE), NET

Other income (expense), net is ~~dissaggregated~~disaggregated as follows:

Three months ended

June 30,

June 30,

2020

2019

Fair value changes on other financial assets

$
21,807

$
(41,087
)
Fair value changes on liability arising from Acreage Arrangement

(35,000
)

-

Fair value changes on convertible senior notes

(20,334
)

31,446

Fair value change on warrant derivative liability

35,369

24,892

Fair value changes on acquisition related contingent consideration

39,983

(1,570
)
Interest income

8,993

22,718

Interest expense

(1,155
)

(1,206
)
Foreign currency loss

(5,959
)

(2,856
)
Other income, net

4,501

431

$
48,205

$
32,768


	Three months ended						Nine months ended
	December 31,			December 31,			December 31,			December 31,
	2023			2022			2023			2022
Fair value changes on other financial assets	$	(146,672	)	$	(95,815	)	$	(163,860	)	$	(396,755	)
Fair value changes on liability arising from Acreage Arrangement		-			-			-			47,000
Fair value changes on debt		(5,400	)		(8,964	)		(30,614	)		(32,365	)
Fair value changes on warrant derivative liability		-			23			-			26,252
Fair value changes on acquisition related contingent consideration and other		8,629			1,762			19,146			25,902
(Charges) and gain related to settlement of debt		(571	)		8,912			(13,124	)		4,224
Interest income		2,548			7,048			13,833			15,922
Interest expense		(24,623	)		(33,286	)		(84,223	)		(90,658	)
Foreign currency gain (loss)		(4,069	)		814			529			1,857
Other income (expense), net		(879	)		4,016			5,043			2,547
	$	(171,037	)	$	(115,490	)	$	(253,270	)	$	(396,074	)

~~25.~~32

26. INCOME TAXES

There have been no material changes to income tax matters in connection with normal course operations during the ~~three~~nine months ended ~~June 30, 2020.~~December 31, 2023.

The Company is subject to income tax in numerous jurisdictions with varying income tax rates. During the most recent period ended and the fiscal year to date, there were no material changes to the statutory income tax rates in the taxing jurisdictions where the majority of the Company’s income for tax purposes was earned, or where its temporary differences or losses are expected to be realized or settled. Although statutory income tax rates remain stable, the Company’s effective income tax rate may fluctuate, arising as a result of the Company’s evolving footprint, discrete transactions and other factors that, to the extent material, are disclosed in these financial statements.

The Company continues to believe that the amount of unrealized tax benefits appropriately reflects the uncertainty of items that are or may in the future be under discussion, audit, dispute or appeal with a tax authority or which otherwise result in uncertainty in the determination of income for tax purposes. If appropriate, an unrealized tax benefit will be realized in the reporting period in which the Company determines that realization is not in doubt. Where the final determined outcome is different from the Company’s estimate, such difference will impact the Company’s income taxes in the reporting period during which such determination is made.

27. THIS WORKS DIVESTITURE

On December 18, 2023, the Company entered into an agreement to divest all of its interest in This Works to a London-based investment firm (the “This Works Divestiture”). The Company completed the This Works Divestiture on December 18, 2023, pursuant to which the Company received a cash payment of $2,249 (£1,333) and a loan note of $5,240 (£3,106) with a maturity date of December 18, 2027. The Company may receive an earnout payment of up to $5,905 (£3,500), subject to certain financial targets.

Prior to closing of the This Works Divestiture, the net assets of This Works were recorded as held for sale and the Company recorded asset impairment and restructuring charges of $28,144. Upon the completion of the This Works Divestiture, the Company no longer controls This Works and derecognized the assets and liabilities on the closing date:


Current assets1	$	13,793
Intangible assets		16,828
Less: valuation allowance		(20,154	)
Current liabilities		(6,661	)
Cumulative translation adjustment		2,322
Net assets disposed	$	6,128

Consideration received in cash	$	2,249
Future cash consideration		7,286
Costs to sell		(3,407	)
Total consideration	$	6,128

Gain on disposal of consolidated entity	$	-

1 Included in current assets is $5,968 of cash.

~~26.~~The gain calculated on the derecognition of the assets and liabilities of This Works is the difference between the carrying amounts of the derecognized assets and liabilities, and the fair value of consideration received, net of costs to sell.

28. ACREAGE ARRANGEMENT AND AMENDMENTS TO CBI INVESTOR RIGHTS AGREEMENT AND WARRANTS

Acreage Arrangement

On ~~June 24,~~September 23, 2020, the Company and Acreage ~~Holdings, Inc. (“Acreage”)~~ entered into a ~~proposal agreement~~second amendment (the ~~“Proposal~~“Acreage Amending Agreement”) to ~~amend~~ the ~~terms of the arrangement (the “Existing Arrangement”) made pursuant to an~~ arrangement agreement (the ~~“Arrangement~~“Original Acreage Arrangement Agreement”) and plan of arrangement (the “Original Acreage Arrangement”) between the Company and Acreage dated April 18, 2019, as amended on May 15, 2019. In connection with the Acreage Amending Agreement, the Company and Acreage implemented an amended and restated plan of arrangement (the “Acreage Amended Arrangement”) on September 23, 2020. Pursuant to the terms of the ~~Existing~~Original Acreage Arrangement, shareholders of Acreage and holders of certain securities convertible into ~~Existing SVS (as defined below)~~the existing Acreage subordinated voting shares as of June 26, 2019, received an immediate aggregate total payment of US$300,000 ($~~395,190)~~395,190) in exchange for granting Canopy Growth both the right and the obligation ~~(the “Acreage financial instrument”)~~ to acquire all of the issued and outstanding shares of Acreage following the occurrence or waiver (at the Company's discretion) of changes in U.S. federal law to permit the general cultivation, distribution, and possession of marijuana or to remove the

regulation of such activities from the federal laws of the United States (the “Triggering Event”) and subject to the satisfaction or waiver of the conditions set out in the Original Acreage Arrangement Agreement.

~~Pursuant to the terms of the Proposal Agreement, the Existing~~The Acreage Amended Arrangement ~~will be amended (the “Amended Arrangement”) to provide~~provides for, among other things, the following:

•

a capital reorganization of Acreage (the “Capital Reorganization”), pursuant to which Acreage will amend its Notice of Articles and Articles to, among other things, create the Fixed Shares (as defined below), the Floating Shares (as defined below) and the Fixed Multiple Shares (as defined below) and remove the existing Acreage subordinated voting shares (the “Existing SVS”), the existing Acreage proportionate voting shares (the “Existing PVS”) and the existing Acreage multiple voting shares (the “Existing MVS”). Pursuant to the Capital Reorganization (i) each outstanding Existing SVS will be exchanged for 0.7 of a Fixed Share and 0.3 of a Floating Share; (ii) each outstanding Existing PVS will be exchanged for 28 Fixed Shares and 12 Floating Shares; and (iii) each outstanding Existing MVS will be exchanged for 0.7 of a Fixed Multiple Share and 0.3 of a Floating Share;

•

Following the occurrence or waiver (at the discretion of Canopy Growth) of the Triggering Event and subject to the satisfaction or waiver of the conditions set out in the Original Acreage Arrangement Agreement (as modified in connection with the Acreage Amending Agreement), Canopy Growth will acquire all of the issued and outstanding Fixed Shares based on an amended exchange ratio equal to 0.03048 of a common share to be received for each Fixed Share held. The foregoing exchange ratio for the Fixed Shares is subject to adjustment in accordance with the Acreage Amended Arrangement if, among other things, Acreage issues greater than the permitted number of Fixed Shares;

•

The new Class E subordinated voting shares (the “Fixed Shares”) will have the same attributes as the Existing SVS and will be listed on the Canadian Securities Exchange (the “CSE”). Following the occurrence or waiver (at the discretion of Canopy Growth) of the Triggering Event and subject to the satisfaction or waiver of the conditions set out in the Arrangement Agreement (as modified in connection with the Amended Arrangement), Canopy Growth will acquire all of the issued and outstanding Fixed Shares based on an amended exchange ratio equal to 0.3048 of a common share to be received for each Fixed Share held (reduced from 0.5818 per Existing SVS pursuant to the Existing Agreement). The foregoing exchange ratio for the Fixed Shares is subject to adjustment in accordance with the Amended Arrangement if, among other things, Acreage issues greater than the permitted number of Fixed Shares;

•

Upon the occurrence or waiver (at the discretion of Canopy Growth) of the Triggering Event, Canopy Growth will have the right (the "Acreage Floating Option") exercisable for a period of 30 days, to acquire all of the issued and outstanding Floating Shares for cash or common shares or a combination thereof, in Canopy Growth’s sole discretion at a price equal to the 30-day volume weighted average trading price of the Floating Shares on the Canadian Securities Exchange, subject to a minimum call price of US$6.41 per Floating Share. The foregoing exchange ratio for the Floating Shares is subject to adjustment in accordance with the Acreage Amended Arrangement if Acreage issues greater than the permitted number of Floating Shares. The acquisition of the Floating Shares, if acquired, will take place concurrently with the closing of the acquisition of the Fixed Shares;

•

The new Class D subordinated voting shares (the “Floating Shares”) will be listed on the CSE. Upon the occurrence or waiver (at the discretion of Canopy Growth) of the Triggering Event, Canopy Growth will have the right exercisable for a period of 30 days, to acquire all of the issued and outstanding Floating Shares for cash or common shares or a combination thereof, in Canopy Growth’s sole discretion at a price equal to the 30-day volume weighted average trading price of the Floating Shares on the CSE, subject to a minimum call price of US$6.41 per Floating Share. The foregoing exchange ratio for the Floating Shares is subject to adjustment in accordance with the Amended Arrangement if Acreage issues greater than the permitted number of Floating Shares. The acquisition of the Floating Shares, if acquired, will take place concurrently with the closing of the acquisition of the Fixed Shares;

•

Immediately prior to the acquisition of the Fixed Shares, each issued and outstanding Class F multiple voting share will automatically be exchanged for one Fixed Share and thereafter be acquired by Canopy Growth upon the same terms and conditions as the acquisition of the Fixed Shares;

•

The new Class F multiple voting shares (the “Fixed Multiple Shares”) will have the same attributes as the Existing MVS, provided that each Fixed Multiple Share will entitle the holder thereof to 4,300 votes per share at shareholder meetings of Acreage. Immediately prior to the acquisition of the Fixed Shares, each issued and outstanding Fixed Multiple Share will automatically be exchanges for one Fixed Share and thereafter be acquired by Canopy Growth upon the same terms and conditions as the acquisition of the Fixed Shares;

•

If the occurrence or waiver of the Triggering Event does not occur by September 23, 2030, Canopy Growth’s rights to acquire both the Fixed Shares and the Floating Shares will terminate;

•

If the occurrence or waiver of the Triggering Event does not occur within 10 years from the date the Amended Arrangement is implemented, Canopy Growth’s rights to acquire both the Fixed Shares and the Floating Shares will terminate;

•

~~Upon implementation of the Amended Arrangement, Canopy Growth will make~~Upon implementation of the Acreage Amended Arrangement, Canopy Growth made a cash payment to ~~the shareholders of Acreage and holders of certain securities convertible into Existing SVS in the aggregate amount of US$37,500; and~~

•

~~Acreage is only permitted to issue an aggregate of up to 32,700,000 Fixed Shares and Floating Shares following the implementation of the Amended Arrangement~~.

Canopy Growth has also agreed to loan a wholly-owned subsidiary of Acreage (“Acreage Hempco”) up to US$100,000 pursuant to a secured debenture, of which US$50,000 will be subject to the satisfaction of certain conditions by Acreage Hempco. The secured debenture will bear interest at a rate of 6.1% per annum, and mature 10 years from the date the Amended Arrangement is implemented or such earlier date in accordance with the terms of the secured debenture. As at June 30, 2020, 0 amounts have been loaned to Acreage Hempco.

~~Implementation of the Amended Arrangement is contingent upon obtaining the requisite prior approvals of~~ the shareholders of Acreage and holders of certain convertible securities in the ~~Supreme Court~~aggregate amount of ~~British Columbia~~US$37,500 ($49,849); and ~~certain other closing conditions.~~

•

Acreage is only permitted to issue an aggregate of up to 32,700,000 Fixed Shares and Floating Shares.

~~At June 30, 2020,~~See Note 3 for information regarding the Reorganization. In connection with the Reorganization and the Floating Share Arrangement Agreement, Canopy Growth irrevocably waived the Acreage Floating Option and subject to, among other things, the terms of the Floating Share Arrangement Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares. Following the implementation of the Reorganization, Canopy USA, as of October 24, 2022, holds certain U.S. cannabis investments previously held by the Company, which is expected to enable Canopy USA, following, among other things, the Meeting and the exercise of the Acreage Option, including the issuance of the Fixed Shares to Canopy USA, to consummate the acquisitions of Acreage, Wana and Jetty.

At December 31, 2023, the right and the obligation to: (i) acquire the Fixed Shares pursuant to the Existing Acreage Arrangement Agreement; and (ii) acquire the Floating Shares pursuant to the Floating Share Arrangement Agreement (together, the “Acreage financial ~~instrument~~instrument”), represents a financial ~~liability~~asset of ~~$285,000~~$33,000 (March 31, ~~2020~~2023 – ~~$250,000), as~~$55,382 asset). At December 31, 2023, the estimated fair value of the Acreage business is ~~less~~more than the estimated fair value of the consideration to be provided upon the exercise of the Acreage financial instrument. Fair value changes ~~of $35,000 (three months ended June 30, 2019 – $nil) were~~on the Acreage financial instrument are recognized in other income (expense), ~~net in the three months ended June 30, 2020 (see~~net; see Note ~~24).~~25. The fair value determination includes a high degree of subjectivity and judgment, which results in significant estimation uncertainty. See Note 2223 for additional details on how the fair value of the Acreage financial instrument is calculated on a recurring basis. From a measurement perspective, ~~Canopy Growth~~the Company has elected the fair value option under ASC 825 – - Financial Instruments("ASC 825").

In connection with the Acreage Amended Arrangement, on September 23, 2020, an affiliate of the Company advanced US$50,000 ($66,995) to Universal Hemp, LLC, a wholly owned subsidiary of Acreage (“Acreage Hempco”) pursuant to a secured debenture (“Hempco Debenture”). In accordance with the terms of the Hempco Debenture, the funds advanced to Acreage Hempco cannot be used, directly or indirectly, in connection with or for any cannabis or cannabis-related operations in the United States, unless and until such operations comply with all applicable laws of the United States. The Hempco Debenture bears interest at a rate of 6.1% per annum and matures on September 23, 2030, or such earlier date in accordance with the terms of the Hempco Debenture. All interest payments made pursuant to the Hempco Debenture are payable in cash by Acreage Hempco. The Hempco Debenture is not convertible and is not guaranteed by Acreage. In connection with the Reorganization, as described in Note 3, on October 24, 2022, the Company transferred the Hempco Debenture to Canopy USA.

The amount advanced on September 23, 2020 pursuant to the Hempco Debenture has been recorded in other financial assets (see Note 11), and the Company has elected the fair value option under ASC 825 (see Note 23). At December 31, 2023, the estimated fair value of the Hempco Debenture issued to an affiliate of the Company by Acreage Hempco was $12,978 (March 31, 2023 –

$29,262), measured using a discounted cash flow model (see Note 23). Refer to Note 11 for details on fair value changes, foreign currency translation adjustment, and anticipated interest to be received. An additional US$50,000 may be advanced pursuant to the Hempco Debenture subject to the satisfaction of certain conditions by Acreage Hempco.

Amendment to the CBI Investor Rights Agreement and warrants

On April 18, 2019, certain ~~wholly-owned~~wholly owned subsidiaries of CBI and Canopy Growth entered into ~~a second amended~~the Second Amended and ~~restated investor rights agreement~~Restated Investor Rights Agreement (the "Amended Investor Rights Agreement") and a consent agreement. In connection with these agreements, on June 27, 2019, Canopy Growth (i) extended the term of the first tranche of warrants, which allow CBI to acquire ~~88.5~~8.85 million additional shares of Canopy Growth for a fixed price of ~~$50.40~~$504.00 per share (the “Tranche A Warrants”), to November 1, ~~2023;~~2023; and (ii) replaced the second tranche of warrants with two new tranches of warrants (the “Tranche B Warrants” and the “Tranche C Warrants”) as follows:

•

the Tranche B Warrants were exercisable to acquire 3.85 million common shares at a price of C$766.80 per common share; and

•

the Tranche C Warrants were exercisable to acquire 1.28 million common shares at a price equal to the 5-day volume-weighted average price of the common shares immediately prior to exercise.

•

~~the Tranche B Warrants are exercisable to acquire 38.5 million common shares at a price of C$76.68 per common~~ ~~share; and~~

•

~~the Tranche C Warrants are exercisable to acquire 12.8 million common shares at a price equal to the 5-day volume-weighted average price of the common shares immediately prior to exercise.~~

In connection with the Tranche B Warrants and the Tranche C Warrants, Canopy Growth ~~will~~agreed to provide CBI with a share repurchase credit of up to ~~$1.583~~$1.583 billion on the aggregate exercise price of the Tranche B Warrants and Tranche C Warrants in the event that Canopy Growth does not purchase for cancellation the lesser of (i) ~~27,378,866~~2,737,886 common ~~shares,~~shares; and (ii) common shares with a value of ~~$1.583~~$1.583 billion, during the period commencing on April 18, 2019 and ending on the date that is 24 months after the date that CBI exercises all of the Tranche A Warrants. ~~The share repurchase credit feature is accounted for as a derivative liability, with the fair value continuing to be $nil at June 30, 2020.~~

The modifications to the Tranche A Warrants resulted in them meeting the definition of a derivative instrument under ASC 815 - Derivatives and Hedging (“ASC 815”). They ~~continue to be~~were classified in equity as the number of shares and exercise price were both fixed at inception.

The Tranche B Warrants ~~are~~were accounted for as derivative instruments (the “warrant derivative liability”) measured at fair value in accordance with ASC 815. ~~At June 30, 2020,~~

On November 1, 2023, the ~~fair value~~Tranche A Warrants expired in accordance with their terms without having been exercised. In accordance with the terms of the ~~warrant derivative~~Tranche B Warrants and Tranche C Warrants, the vesting of the remaining Tranche B Warrants and Tranche C Warrants, as applicable, is conditioned on the exercise, in full, of the Tranche A Warrants. Accordingly, the Tranche B Warrants and Tranche C Warrants are not, and will not become, exercisable and are considered expired as of November 1, 2023.

As described in Note 3, in connection with the Reorganization, the Company entered into the Third Consent Agreement, pursuant to which CBG and Greenstar agreed, among other things, that in the event that CBG and Greenstar convert their ownership in the Company's common shares into Exchangeable Shares, CBG will surrender the warrants held by CBG to purchase 13,974,545 common shares of the Company for cancellation for no consideration. In addition, following such conversion by CBG and Greenstar of their common shares into Exchangeable Shares, other than the Third Consent Agreement and the termination rights contained therein and the CBI Note (as defined below), all agreements between the Company and CBI will terminate, including the Amended Investor Rights Agreement. In such circumstances it is expected that the CBI nominees that are currently sitting on the Board will resign as directors of the Company following the termination of the Amended Investor Rights Agreement.

29. COMMITMENTS AND CONTINGENCIES

Legal proceedings

In the ordinary course of business, the Company is at times subject to various legal proceedings and disputes, including the proceedings specifically discussed below. The Company assesses the liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, a liability is ~~$287,122,~~recorded in the consolidated financial statements. Where a loss is only reasonably possible or the amount of the loss cannot be reasonably estimated, no liability is recorded in the consolidated financial statements, but disclosures, as necessary, are provided.

For the purposes of these condensed interim consolidated financial statements, there have been no material changes with respect to legal proceedings that the Company is subject to since our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, except with respect to certain aspects of the legal proceedings disclosed below:

Request for arbitration

On December 29, 2023, a request for arbitration was made to the Company. Damages are being sought in the amount of US$32,667 against the Company based on alleged breaches of a Share Purchase Agreement (“SPA”), including breaches of the duty of good faith and ~~a gain~~honest performance in relation to certain milestone payments in the SPA. The Company denies the allegations,

believes that the respondents have meritorious defenses, and expects to vigorously defend the claims, although the Company cannot predict when or how the arbitration will be resolved or estimate what the potential loss or range of ~~$35,369 (three~~loss would be, if any.

30. SEGMENT INFORMATION

Reportable segments

Prior to the three months ended ~~June~~September 30, ~~2019 – gain~~2022, the Company had the following two reportable segments: (i) global cannabis; and (ii) other consumer products. Following the completion of ~~$24,892) has been recognized in other income (expense), net~~certain restructuring actions which were initiated in the three months ended ~~June 30, 2020 (see Note 24). The fair value determination includes a high degree of subjectivity~~March 31, 2022, and ~~judgment,~~ which ~~results in significant estimation uncertainty. See Note 22 for additional details on how the fair value of the warrant derivative liability is calculated on a recurring basis.~~

~~The Tranche C Warrants are accounted for as derivative instruments,~~were aligned with the ~~fair value continuing to be $nil at June~~Company's strategic review of its business, the Company has changed the structure of its internal management financial reporting. Accordingly, in the three months ended September 30, ~~2020.~~2022, the Company began reporting its financial results for the following four reportable segments:

~~27. SEGMENT INFORMATION~~

~~Reportable segments~~

~~The Company operates in 2 segments: 1) Cannabis, Hemp and Other Consumer Products, which encompasses~~

•

Canada cannabis- includes the production, distribution and sale of a diverse range of cannabis, ~~hemp-based,~~hemp and ~~other consumer~~cannabis-related products in Canada pursuant to the Cannabis Act;

•

Rest-of-world cannabis - includes the production, distribution and sale of a diverse range of cannabis and hemp products internationally pursuant to applicable international ~~and domestic~~ legislation, regulations and ~~permits;~~permits. Priority markets include medical cannabis markets in Australia, Germany, Poland and ~~2) Canopy Rivers, a publicly-traded company in Canada, through which~~Czech Republic where the Company ~~provides growth capital~~offers branded high-quality flower, oil and ~~strategic support~~softgel extracts products under our recognized Spectrum Therapeutics brand (in Australia, Poland and Czech Republic) and more recently the Canopy Medical brand in Germany;

•

Storz & Bickel - includes the ~~global cannabis sector, where federally lawful. Financial information for Canopy Rivers is~~production, distribution and sale of vaporizers and accessories; and

•

This Works - includes the production, distribution and sale of beauty, skincare, wellness and sleep products, some of which have been blended with hemp-derived CBD isolate. On December 18, 2023, the Company completed the sale of This Works and as of such date, the results of This Works are no longer included in the ~~table below,~~Company's financial results.

These 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 has been restated to reflect the aforementioned change in ~~Note 21.~~reportable segments. The remainder of the Company's operations include revenue derived from, and cost of sales associated with, the Company's non-cannabis extraction activities and other ancillary activities; these are included within "other".

June 30,
2020

March 31,
2020

Ownership interest

27
%

27
%
Cash and cash equivalents

$
43,915

$
46,724

Prepaid expenses and other current assets

11,815

11,598

Investments in associates

46,291

50,543

Other financial assets

150,134

146,812

Other long-term assets

22,776

22,058

Other liabilities

(2,737
)

(2,771
)
Noncontrolling interests

(209,606
)

(211,086
)
Equity attributable to Canopy Growth

$
62,588

$
63,878


	Three months ended						Nine months ended
	December 31,			December 31,			December 31,			December 31,
	2023			2022			2023			2022
Segmented net revenue
Canada cannabis	$	39,028		$	46,617		$	116,634		$	151,336
Rest-of-world cannabis		10,527			5,846			29,666			30,179
Storz & Bickel		18,453			20,214			48,517			49,351
This Works		8,165			8,289			21,256			20,677
Other		2,332			3,884			8,285			13,475
	$	78,505		$	84,850		$	224,358		$	265,018
Segmented gross margin:
Canada cannabis	$	11,113		$	(5,281	)	$	24,739		$	(25,467	)
Rest-of-world cannabis		4,192			(2,184	)		10,364			(3,676	)
Storz & Bickel		9,449			9,186			21,074			20,809
This Works		4,253			4,032			10,534			8,982
Other		(781	)		(525	)		(1,297	)		144
		28,226			5,228			65,414			792
Selling, general and administrative expenses		54,436			89,604			174,810			271,425
Share-based compensation		3,693			6,055			10,127			20,893
Loss on asset impairment and restructuring		30,413			22,259			2,452			1,794,212
Operating loss		(60,316	)		(112,690	)		(121,975	)		(2,085,738	)
Other income (expense), net		(171,037	)		(115,490	)		(253,270	)		(396,074	)
Loss before incomes taxes	$	(231,353	)	$	(228,180	)	$	(375,245	)	$	(2,481,812	)

Asset information by segment is not provided to, or reviewed by, the Company’s CODM as it is not used to make strategic decisions, allocate resources, or assess performance.

Entity-wide disclosures

~~All~~Disaggregation of net revenue by geographic area:


	Three months ended				Nine months ended
	December 31,		December 31,		December 31,		December 31,
	2023		2022		2023		2022
Canada	$	41,024	$	50,333	$	123,724	$	163,002
Germany		13,460		12,772		35,287		36,383
United States		10,334		9,447		28,102		29,825
Other		13,687		12,298		37,245		35,808
	$	78,505	$	84,850	$	224,358	$	265,018

Disaggregation of property, plant and equipment ~~are located in Canada, except for $487,834 which is located outside of Canada as at June 30, 2020 (March 31, 2020 – $499,059).~~by geographic area:


	December 31,		March 31,
	2023		2023
Canada	$	285,941	$	361,129
United States		3,561		58,226
Germany		50,951		51,341
Other		26		575
	$	340,479	$	471,271

All revenues were principally generated in Canada during the three months ended June 30, 2020, except for $44,699 related to exported medical cannabis and cannabis related merchandise generated outside of Canada (three months ended June 30, 2019 – $22,541).

For the three months ended ~~June 30, 2020, 1~~December 31, 2023, one customer represented more than 10% of the Company’s net revenue (three months ended December 31, 2022 – one).

For the nine months ended December 31, 2023, one customer represented more than 10% of the Company's net revenue (nine months ended December 31, 2022 – none).

31. SUBSEQUENT EVENTS

January 2024 Private Placement

On January 18, 2024, the Company entered into subscription agreements (the "January 2024 Subscription Agreements") with certain institutional investors (the "January 2024 Investors"). Pursuant to the terms of the January 2024 Subscription Agreements, the Company issued 8,158,510 units of the Company (the "January 2024 Units") to the January 2024 Investors at a price per January 2024 Unit of US$4.29 for aggregate gross proceeds of approximately $47,117 (US$35,000) (the "January 2024 Unit Offering"). Each January 2024 Unit is comprised of (a) one Canopy Growth common share and (b)(i) one Series A common share purchase warrant (a "Series A Warrant") or (ii) one Series B common share purchase warrant (a "Series B Warrant" and, together with the Series A Warrants, the "January 2024 Warrants"). Each January 2024 Warrant entitles the holder to acquire one Canopy Growth common share from the Company at a price per share equal to US$4.83. The Series A Warrants are currently exercisable and will remain exercisable until January 19, 2029, and the Series B Warrants will be exercisable for a period commencing on July 19, 2024 until July 19, 2029. The January 2024 Unit Offering closed on January 19, 2024.

Expiration of Supreme January 2021 Warrants

On January 29, 2024, the warrants governed by the warrant indenture dated January 29, 2021 between Supreme Cannabis and Computershare Trust Company of Canada, in its capacity as warrant agent (the “Warrant Agent”), as supplemented by the supplemental indenture dated June ~~30, 2019 – 1).~~22, 2021 between Supreme Cannabis, the Company and the Warrant Agent expired in accordance with their terms without having been exercised.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis (“MD&A”) should be read together with other information, including our unaudited condensed interim consolidated financial statements and the related notes to those statements included in Part I, Item 1 of this Quarterly Report (the “Interim Financial Statements”), our consolidated financial statements appearing in our Annual Report on Form 10-K for the year ended March 31, ~~2020 (as amended, the~~2023 (the “Annual Report”) ~~and~~, Part I, Item 1A, Risk Factors, of the Annual Report and Part II, Item 1A, Risk Factors, of this Quarterly Report. This MD&A provides additional information on our business, recent developments, financial condition, cash flows and results of operations, and is organized as follows:

We prepare and report our Interim Financial Statements in accordance with accounting principles generally accepted in the United States of America ("U.S. ~~GAAP.~~GAAP"). Our Interim Financial Statements, and the financial information contained herein, are reported in thousands of Canadian dollars, except share and per share amounts or as otherwise stated. We have determined that the Canadian dollar is the most relevant and appropriate reporting currency as, despite continuing shifts in the relative size of our operations across multiple geographies, the majority of our operations are conducted in Canadian dollars and our financial results are prepared and reviewed internally by management in Canadian dollars.

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and other applicable securities laws, which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Forward-looking statements include, but are not limited to, statements with respect to:

Certain of the forward-looking statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.

The forward-looking statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) management’s perceptions of historical trends, current conditions and expected future developments; (ii) our ability to generate cash flow from operations; (iii) general economic, financial market, regulatory and political conditions in which we operate; (iv) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (v) consumer interest in our products; (vi) competition; (vii) anticipated and unanticipated costs; (viii) government regulation of our activities and products including but not limited to the areas of taxation and environmental protection; (ix) the timely receipt of any required regulatory authorizations, approvals, consents,

permits and/or licenses; (x) our ability to obtain qualified staff, equipment and services in a timely and cost-efficient manner; (xi) our ability to conduct operations in a safe, efficient and effective manner; (xii) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our recent acquisitions into our existing operations; ~~(xiii) our ability to continue to operate in light of the COVID-19 pandemic~~ and ~~the impact of the pandemic on demand for, and sales of, our products and our distribution channels; and (xiv)~~(xiii) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking statements in this Quarterly Report and other reports we file with, or furnish to, the Securities and Exchange Commission (the “SEC”) and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, risks related to our ability to remediate the material weaknesses in our internal

control over financial reporting, or inability to otherwise maintain an effective system of internal control; the risk that ~~the COVID-19 pandemic may disrupt~~ our ~~operations~~recent restatement could negatively affect investor confidence and those of our suppliers and distribution channels and negatively impact the use of our products; consumer demand for cannabis and U.S. hemp products; that cost savings and any other synergies from the CBI Group Investments may not be fully realized or may take longer to realize than expected; future levels of revenues;raise reputation risks; our ability to ~~manage disruptions~~continue as a going concern; our limited operating history; risks that we may be required to write down intangible assets, including goodwill, due to impairment; the diversion of management time on issues related to Canopy USA; the ability of parties to certain transactions to receive, in ~~credit markets or changes to our credit rating; future levels of capital, environmental or maintenance expenditures, general~~a timely manner and ~~administrative~~on satisfactory terms, the necessary regulatory, court and ~~other expenses;~~shareholder approvals; the ~~success or timing of~~risks that the Trust’s ownership interest in Canopy USA is currently not quantifiable and the Trust may have significant ownership and influence over Canopy USA upon completion of ~~ongoing~~the Trust Transaction (as defined below); the risks relating to the conditions in the Floating Share Arrangement and the Acreage Amending Agreement (as defined below) not being satisfied or ~~anticipated capital or maintenance projects; business strategies, growth opportunities and expected investment;~~waived; the risks related to Acreage’s financial statements expressing doubt about its ability to continue as a going concern; the risks related to the Company losing the Option Premium in the event Acreage cannot satisfy its debt obligations as they become due; the risks related to the fact that the Company has not received audited financial statements with respect to Jetty; the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); ~~the potential effects of judicial or other proceedings on our business, financial condition, results of operations and cash flows;~~ volatility in and/or degradation of general economic, market, industry or business conditions; risks relating to our current and future operations in emerging markets; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; risks and uncertainty regarding future product development; changes in regulatory requirements in relation to our business and products; our reliance on licenses issued by and contractual arrangements with various federal, state and provincial governmental authorities; inherent uncertainty associated with projections; future levels of revenues and the impact of increasing levels of competition; third-party manufacturing risks; third-party transportation risks; inflation risks; our exposure to risks related to an agricultural business, including wholesale price volatility and variable product quality; changes in laws, regulations and guidelines and our compliance with such laws, regulations and guidelines; risks relating to inventory write downs; risks relating to our ability to refinance debt as and when required on terms favorable to us and to comply with covenants contained in our debt facilities and debt instruments; risks associated with jointly owned investments; our ability to manage disruptions in credit markets or changes to our credit ratings; the success or timing of completion of ongoing or anticipated capital or maintenance projects; risks related to the integration of acquired businesses; the timing and manner of the legalization of cannabis in the United States; business strategies, growth opportunities and expected investment; counterparty risks and liquidity risks that may impact our ability to obtain loans and other credit facilities on favorable terms; the potential effects of judicial, regulatory or other proceedings, litigation or threatened litigation or proceedings, or reviews or investigations, on our business, financial condition, results of operations and cash flows; risks associated with divestment and restructuring; the anticipated effects of actions of third parties such as competitors, activist investors or federal, state, provincial, territorial or local regulatory authorities, self-regulatory organizations, plaintiffs in litigation or persons threatening litigation; ~~changes~~consumer demand for cannabis and U.S. hemp products; the risks that the Canadian Transformative Plan will not result in ~~regulatory requirements~~the expected cost-savings, efficiencies and other benefits or will result in ~~relation~~greater than anticipated turnover in personnel; the implementation and effectiveness of key personnel changes; risks related to stock exchange restrictions; risks related to the protection and enforcement of our ~~business~~intellectual property rights; the risks related to the Exchangeable Shares having different rights from our common shares and ~~products;~~there may never be a trading market for the Exchangeable Shares; future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; risks relating to the long term macroeconomic effects of the COVID-19 pandemic and any future pandemic or epidemic; and the factors discussed under the heading “Risk Factors” in the Annual Report and in Item 1A of Part II of this Quarterly Report. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.

Forward-looking statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management’s current expectations and plans relating to the future, and the reader is cautioned that the forward-looking statements may not be appropriate for any other purpose. While we believe that the assumptions and expectations reflected in the forward-looking statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-looking statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by law. The forward-looking statements contained in this Quarterly Report and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.

We are a ~~leading~~world-leading cannabis and consumer packaged goods (“CPG”) company ~~with operations in countries across the world. We produce, distribute~~which produces, distributes, and ~~sell~~sells a diverse range of cannabis, hemp, and ~~hemp-based~~CPG products. Cannabis products ~~and other consumer products~~are principally sold for ~~both recreational~~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 and Canadian legislation, regulations, and permits.

~~On October 17, 2018, the~~ ~~Cannabis Act~~ ~~came into effect~~ Our core operations are in Canada, ~~regulating both~~ the ~~medical~~United States, and ~~recreational~~

priority growth markets internationally, including Australia, Germany, Poland and Czech Republic. Our other product offerings, which are sold by our subsidiaries in jurisdictions where it is permissible to do so, include Storz & Bickel GmbH (“Storz & Bickel”) vaporizers and accessories.

We currently offer product varieties in dried cannabis markets in Canada and providing provincial, territorial and municipal governments the authority to prescribe regulations regarding the distribution and sale of recreational cannabis. On October 17, 2019, the second phase of recreational cannabis products, specifically, ingestible cannabis,flower, cannabis extracts and concentrates, cannabis ~~topical products (referred to as “Cannabis 2.0”), were legalized pursuant to certain amendments to the regulations under the~~ ~~Cannabis Act. We began selling our cannabis-infused chocolates, cannabis-infused beverage offerings, vape pen power sources~~beverages, cannabis gummies and pod-based vape devices across Canada in the fourth quarter of fiscal 2020, with these products complementing our existing flower, oil and softgel products. Our 510-threaded vape cartridges began shipping into the market in April 2020,cannabis vapes with product availability varying based on provincial and territorial regulations. ~~Our recreational~~In Canada, our adult-use cannabis products are

predominantly sold to provincial and territorial agencies under a “business-to-business” wholesale model, with those provincial and territorial agencies then being responsible for the distribution of our products to brick-and-mortar stores and for online retail sales. ~~We have also opened a network~~In fiscal 2023, we completed the divestiture of our retail business across Canada, which included the retail stores operating under the Tweed and Tokyo Smoke ~~retail stores across Canada, where permissible, to promote brand awareness and drive consumer demand~~banners under a “business-to-consumer” model.

Our Spectrum Therapeutics medical ~~division~~brand is a ~~global~~ leader in medical cannabis. Spectrum Therapeutics produces and distributes a diverse portfolio of medical cannabis products to ~~healthcare practitioners and~~ medical ~~customers~~patients in Canada, and in several other countries where it is federally permissible to do ~~so, and Spectrum Therapeutics also offers education, resource and support programs. In April 2019 we acquired C~~³ ~~Cannabinoid Compound Company (“C~~³”), Europe’s largest cannabinoid-based pharmaceuticals company and a leading manufacturer of dronabinol, a registered active pharmaceutical ingredient in Germany and certain other European countries. The addition of dronabinol has allowed us to expand our portfolio of medical cannabis offerings for our customers in countries where permissible.so.

Subsequent to the passage of the ~~U.S. Agricultural Improvement Act of~~ 2018 ~~in December 2018, we began building our hemp supply chain~~Farm Bill in the United States, ~~through our investment in hemp growing capability and in processing, extraction and finished goods manufacturing facilities. We sell~~we currently offer a line of premium quality, hemp-derived ~~CBD isolate products under the First & Free brand, including~~wellness gummies, oils, softgels and ~~topical creams.~~ topicals under the Martha Stewart CBD brand.

In June 2019, we ~~executed an~~implemented a plan of arrangement ~~(the “Existing Arrangement”)~~ pursuant to an arrangement agreement (the ~~“Arrangement~~“Original Acreage Arrangement Agreement”) with Acreage Holdings, Inc. (“Acreage”), a U.S. multi-state cannabis operator. In September 2020, we entered into a second amendment to the Original Acreage Arrangement Agreement (the “Acreage Amending Agreement”) and implemented an amended and restated plan of arrangement (the “Acreage Amended Arrangement”). Pursuant to the ~~Existing~~Acreage Amended Arrangement, following the occurrence or waiver (at our discretion) of changes in U.S. federal law to permit the general cultivation, distribution, and possession of marijuana or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event”) and subject to the satisfaction or waiver of the conditions set out in the Original Acreage Arrangement Agreement ~~we will~~(as modified by the Acreage Amending Agreement), we: (i) agreed to acquire ~~all~~approximately 70% of the issued and outstanding shares of Acreage, and (ii) obtained the right (the “Acreage Floating Option”) to acquire the other approximately 30% of the issued and outstanding shares of Acreage. In ~~June 2020, we entered into~~connection with the ~~Proposal~~Floating Share Arrangement Agreement (as defined below) ~~with~~, Canopy Growth has irrevocably waived the Acreage ~~to amend the terms of~~Floating Option existing under the Existing ~~Arrangement; refer to “Recent Developments” below for further information.~~Acreage Arrangement Agreement (as defined below). The acquisition of Acreage, if completed through Canopy USA, will provide a pathway into cannabis markets in the United States; however, we and Acreage will continue to operate as independent companies until the acquisition of Acreage is completed.

On October 14, 2021, we entered into definitive option agreements (the “Wana Agreements”) with Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, “Wana”) providing us with the right, upon the occurrence or waiver (at our discretion) of the Triggering Event, to acquire 100% of the outstanding membership interests of Wana. Wana manufactures and sells gummies in the state of Colorado and licenses its intellectual property to partners, who manufacture, distribute, and sell Wana-branded gummies across the United States, including in California, Arizona, Illinois, Michigan and Florida, and across Canada. Additionally, on May 17, 2022, we and Lemurian, Inc. (“Jetty”) entered into definitive agreements (the “Jetty Agreements”) providing us with the right to acquire up to 100% of the outstanding equity interests in Jetty upon the Triggering Event. Jetty is a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology.

As described below under “Recent Developments”, on October 25, 2022, we announced the implementation of our internal reorganization pursuant to which, among other things, we formed Canopy USA, a new Delaware holding company (the “Reorganization”). Following the implementation of the Reorganization, as of October 24, 2022, Canopy USA holds certain U.S. cannabis investments that were previously held by Canopy Growth, which is expected to enable Canopy USA, following, among other things, the Meeting (as defined below) and the exercise of the Acreage Option (as defined below), including the issuance of the Fixed Shares (as defined below) to Canopy USA, to consummate the acquisitions of Acreage, Wana, and Jetty.

Our other product offerings, which are sold by our subsidiaries in jurisdictions where it is permissible to do so, include (i) vaporizers sold by Storz & Bickel GmbH & Co. KG (“Storz & Bickel”); (ii) beauty, skincare, wellness and sleep products, some of which have been blended with hemp-derived CBD isolate, sold by This Works Products Limited (“This Works”); and (iii) sports nutrition beverages, mixes, protein, gum and mints, some of which have been infused with hemp-derived CBD isolate, sold by BioSteel.

~~Our~~cannabis products contain THC, CBD, or a combination of these two cannabinoids which are found in the ~~Cannabis~~cannabis sativa plant species. THC is the primary psychoactive or intoxicating cannabinoid found in cannabis. We also refer throughout this MD&A to ~~“hemp”,~~“hemp,” which is a term used to classify varieties of the ~~Cannabis~~cannabis sativa plant that contain CBD and 0.3% or less THC content (by dry weight). Conversely, references to the term “marijuana” refers to varieties of the ~~Cannabis~~cannabis sativa plant with more than 0.3% ~~THC content and moderate levels of CBD.~~THC.

Our licensed operational capacity in Canada includes ~~indoor, greenhouse and outdoor cultivation space; post-harvest processing and cannabinoid extraction capability;~~ advanced manufacturing capability for ~~vape products,~~oil and softgel encapsulation and pre-rolled ~~joints; a beverage production facility;~~joints which is primarily completed at our Smiths Falls facility. Our Canadian cannabis cultivation facilities are now concentrated at our existing licensed facilities in Kincardine, Ontario and ~~a chocolate~~Kelowna, British Columbia. Our remaining products are manufactured through third-party sourcing and manufacturing ~~facility. These infrastructure investments allow us~~for certain cannabis beverages, edibles, vapes and extracts.

Prior to ~~supply~~ the ~~recreational~~second quarter of fiscal 2023, we had the following two reportable segments: (i) global cannabis; and ~~medical markets~~(ii) other consumer products. Following the completion of certain restructuring actions which were initiated in the fourth quarter of fiscal 2022, and which were aligned with ~~a complimentary balance~~our strategic review of ~~flower products and extracted cannabinoid input for~~ our ~~oil, CBD and Cannabis 2.0 products. Additionally,~~business, we have ~~built a hemp supply chain~~changed the structure of our internal management financial reporting. In addition, the commencement of the CCAA Proceedings resulted in the ~~United States,~~removal of one of our segments. We now report our financial results for the following four reportable segments:

Management has continued to closely monitor the impact of the COVID-19 global pandemic, with a focus on the health and safety of our employees, business continuity and supporting our communities. We established a COVID-19 Management Committee shortly after the declaration of COVID-19 as a global pandemic and implemented various measures to reduce the spread of the virus, as highlighted in the MD&A section of our Annual Report. We have continued to operate under the preventative measures as

previously described and have experienced minimal disruption to our production and supply chain. In addition, since our non-production workforce continues to effectively work remotely using various technology tools, we are able to maintain our full operations and internal controls over financial reporting and disclosures.

We temporarily closed our Tweed and Tokyo Smoke retail stores beginning in mid-March in response to the COVID-19 pandemic. Upon re-opening, beginning in mid-April, our retail stores largely operated with reduced hours and under a “click-and-collect” model with curbside pickup or delivery. As of the date of the filing of this Quarterly Report, all 22 of our corporate-owned retail stores are open and offering click-and-collect and in-store shopping. Our Canadian medical business, which operates as an ecommerce channel, has continued largely unchanged. Our international medical business operates primarily as a pharmacy model, with pharmacies being deemed essential businesses in Germany and other European countries in which we conduct business.

Given the uncertainties associated with the COVID-19 pandemic, including those related to the use of our products by consumers, disruptions to the global and local economies due to related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations and a reduction in discretionary consumer spending, we are unable to estimate the long-term impact of the COVID-19 pandemic on our business, financial condition, results of operations, and/or cash flows. We expect the COVID-19 pandemic to continue to negatively affect our results of operations for the second quarter of fiscal 2021 and, if the effects of the COVID-19 pandemic continue, our results so long as the measures used to contain the pandemic remain in effect. We believe we have sufficient liquidity available from cash and cash equivalents and short-term investments on hand of $975.9 million and $1.1 billion, respectively at June 30, 2020, and from available capacity under our revolving debt facility to enable us to meet our working capital and other operating requirements, fund growth initiatives and capital expenditures, settle our liabilities, and repay scheduled principal and interest payments on debt. Refer to “Part 3 – Financial Liquidity and Capital Resources” for further information.

On June 24, 2020, we entered into a proposal agreement (the “Proposal Agreement”) with Acreage to amend the terms of the Existing Arrangement made pursuant to the Arrangement Agreement between us and Acreage dated April 18, 2019, as amended on May 15, 2019. Pursuant to the terms of the Existing Arrangement, shareholders of Acreage and holders of certain securities convertible into Existing SVS (as defined below) as of June 26, 2019, received an immediate aggregate total payment of US$300.0 million ($395.2 million) in exchange for granting Canopy Growth both the right and the obligation (the “Acreage financial instrument”) to acquire all of the issued and outstanding shares of Acreage following the occurrence or waiver of the Triggering Event and subject to the satisfaction or waiver of the conditions set out in the Arrangement Agreement.

~~Pursuant to the terms of the Proposal Agreement, the Existing Arrangement will be amended (the “Amended Arrangement”) to provide for, among other things, the following:~~

Canopy Growth has also agreed to loan a wholly-owned subsidiary of Acreage (“Acreage Hempco”) up to US$100.0 million pursuant to a secured debenture, of which US$50.0 million will be subject to the satisfaction of certain conditions by Acreage Hempco. The secured debenture will bear interest at a rate of 6.1% per annum, and mature 10 years from the date the Amended Arrangement is implemented or such earlier date in accordance with the terms of the secured debenture. As at June 30, 2020, no amounts have been loaned to Acreage Hempco.

Implementation of the Amended Arrangement is contingent upon obtaining the requisite prior approvals of the shareholders of Acreage and the Supreme Court of British Columbia and certain other closing conditions.

Revenue by Channel

Three months ended June 30,

(in thousands of Canadian dollars)

2020

2019

$ Change

% Change

Recreational net revenue

Business-to-business¹

$
34,934

$
38,881

$
(3,947
)

(10
%)
Business-to-consumer

9,330

10,638

(1,308
)

(12
%)

44,264

49,519

(5,255
)

(11
%)
Medical net revenue

Canadian²

13,910

11,686

2,224

19
%
International

20,191

10,496

9,695

92
%

34,101

22,182

11,919

54
%

Other revenue

32,051

18,781

13,270

71
%
Net revenue

$
110,416

$
90,482

19,934

22
%

¹ Includes excise taxes of $7,246 for the three months ended June 30, 2020 (three months ended June 30, 2019 - $11,544).

²Includes excise taxes of $1,426 for the three months ended June 30, 2020 (three months ended June 30, 2019 - $1,365).

Revenue by Form

Three months ended June 30,

(in thousands of Canadian dollars)

2020

2019

$ Change

% Change

Recreational revenue by form

Dry bud

$
40,129

$
60,854

$
(20,725
)

(34
%)
Oils and softgels

7,721

8,209

(488
)

(6
%)
Cannabis 2.0 products

7,060

-

7,060

-

Other revenue adjustments¹

(3,400
)

(8,000
)

4,600

58
%
Excise taxes

(7,246
)

(11,544
)

4,298

37
%

44,264

49,519

(5,255
)

(11
%)
Medical revenue by form

Dry bud

10,205

7,210

2,995

42
%
Oils and softgels

25,008

16,337

8,671

53
%
Cannabis 2.0 products

314

-

314

-

Excise taxes

(1,426
)

(1,365
)

(61
)

(4
%)

34,101

22,182

11,919

54
%

Other revenue

32,051

18,781

13,270

71
%
Net revenue

$
110,416

$
90,482

$
19,934

22
%

¹ Other revenue adjustments represent our determination of returns and pricing adjustments.

Net revenue in the first quarter of fiscal 2021 was $110.4 million, as compared to $90.5 million in the first quarter of fiscal 2020. The year-over-year increase is primarily attributable to (i) the year-over-year increase in other revenue resulting from strong performance by Storz & Bickel, a full quarter of revenue contribution from This Works (acquired in May 2019), and the acquisition of BioSteel in October 2019; and (ii) the year-over-year increase in medical net revenue, which was primarily due to a full quarter of revenue contribution from C³ (acquired in April 2019), and year-over-year growth in our German and Canadian medical businesses. These increases were partially offset by a year-over-year decrease in Canadian recreational net revenue.

~~Canadian recreational net revenue in the first quarter of fiscal 2021 was $44.3 million, as compared to $49.5 million in the first quarter of fiscal 2020.~~

Net revenue from the business-to-business channel in the first quarter of fiscal 2021 was $34.9 million, as compared to $38.9 million in the first quarter of fiscal 2020. The year-over-year decrease is primarily attributable to lower sales of our dry bud products, which is largely a result of increased competition in the value-priced dried flower category of the recreational market. In recent quarters we have observed an increase in the number of competitive offerings, particularly those with higher THC potency, and aggressive pricing strategies adopted by some market participants. The impact of lower dry bud product sales was partially offset by the introduction of our portfolio of Cannabis 2.0 product offerings across Canada over the past several months, as highlighted in the “Business Overview” section above. In the first quarter of fiscal 2021, sales of our Cannabis 2.0 products represented approximately 13% of gross revenue from the business-to-business channel.

Revenue from the business-to-consumer channel in the first quarter of fiscal 2021 was $9.3 million, as compared to $10.6 million in the first quarter of fiscal 2020. The year-over-year decrease is primarily attributable to the temporary closures of our Tweed and Tokyo Smoke retail stores beginning in mid-March in response to the COVID-19 pandemic. Upon re-opening, beginning in mid-April, our retail stores largely operated with reduced hours and under a “click-and-collect” model with curbside pickup or delivery, where permitted by provincial governments. Partially offsetting the adverse impact of COVID-19 related retail store closures is an increase related to the build-out of our retail store platform across Canada. At June 30, 2020, we had 22 corporate-owned Tweed and Tokyo Smoke retail stores in operation, an increase of 2 stores from June 30, 2019.

Medical cannabis net revenue in the first quarter of fiscal 2021 was $34.1 million, as compared to $22.2 million in the first quarter of fiscal 2020. Canadian medical net revenue in the first quarter of fiscal 2021 was $13.9 million, as compared to $11.7 million in the first quarter of fiscal 2020. The year-over-year increase is due primarily to the prior year quarter being impacted by the transition of our medical customers to the Spectrum Therapeutics online store and its more medical-focused range of cannabis

products prior to the opening of the Canadian recreational market in October 2018. Since that transition, we have broadened our brand and medical cannabis product offerings available on the Spectrum Therapeutics online store in response to medical customer demand. International medical revenue in the first quarter of fiscal 2021 was $20.2 million, as compared to $10.5 million in the first quarter of fiscal 2020. C³ (acquired in April 2019) contributed a full quarter of revenue totaling $15.4 million in the current quarter, a year-over-year increase of $6.6 million. Additionally, the year-over-year growth in our German medical business of $3.1 million is attributable to the resolution of supply constraints we had experienced early in the prior fiscal year, and which were associated with the opening of the recreational cannabis market in Canada.

~~Other revenue is comprised of revenue related to (i) vaporizers sold by Storz & Bickel; (ii)~~ beauty, skincare, wellness and sleep products, some of which have been blended with hemp-derived CBD ~~isolate, sold~~isolate. On December 18, 2023, the Company completed the sale of This Works and as of such date, the results of This Works are no longer included in the Company's financial results.

These segments reflect how our operations are managed, how our Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), allocates resources and evaluates performance, and how our internal management financial reporting is structured. Our 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. The information regarding segment net revenue and segment gross margin for the comparative periods has been restated to reflect the aforementioned change in reportable segments. The remainder of our operations include revenue derived from, and cost of sales associated with, our non-cannabis extraction activities and other ancillary activities; these are included within "other."

On October 24, 2022, Canopy Growth completed a number of strategic transactions in connection with the creation of a new U.S.-domiciled holding company, Canopy USA (the “Reorganization”). Following the implementation of the Reorganization, Canopy USA, as of October 24, 2022, holds certain U.S. cannabis investments previously held by ~~This Works;~~Canopy Growth, which is expected to enable Canopy USA, following, among other things, the Meeting (as defined below) and the exercise of the Acreage Option, including the issuance of the Fixed Shares to Canopy USA, to consummate the acquisitions of Acreage, Wana, and Jetty.

Following the implementation of the Reorganization, as of October 24, 2022, Canopy USA holds an ownership interest in the following assets, among others:

Canopy Growth currently retains the option to acquire the issued and outstanding Class E subordinate voting shares (the “Fixed Shares”) of Acreage (the “Acreage Option”), representing approximately 70% of the total shares of Acreage, at a fixed share exchange ratio of 0.03048 of a Canopy Growth common share per Fixed Share. Concurrently with the closing of the acquisition of the Fixed Shares pursuant to the exercise of the Acreage Option, the Fixed Shares will be issued to Canopy USA. In addition, Canopy USA has agreed to acquire all of the issued and outstanding Class D subordinate voting shares of Acreage (the “Floating Shares”) by way of a court-approved plan of arrangement (the “Floating Share Arrangement”) in exchange for 0.045 of a common share of Canopy Growth for each Floating Share held. Acreage is a leading 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.

indirect interests in TerrAscend included: (i) 38,890,570 exchangeable shares in the capital of TerrAscend (the “TerrAscend Exchangeable Shares”), an option to purchase 1,072,450 TerrAscend common shares (the “TerrAscend Common Shares”) for an aggregate purchase price of $1.00 (the “TerrAscend Option”), and 22,474,130 TerrAscend Common Share purchase warrants previously held by Canopy Growth (the “TerrAscend Warrants”); and (ii) the debentures and loan agreement between Canopy Growth and certain TerrAscend subsidiaries.

On December 9, 2022, Canopy USA and certain limited partnerships that are controlled by Canopy USA entered into a debt settlement agreement (the "Debt Settlement Agreement") with TerrAscend, TerrAscend Canada Inc. (“TerrAscend Canada”) and Arise Bioscience, Inc. (“Arise Bioscience”) whereby $125,467 in aggregate loans, including accrued interest thereon, payable by certain subsidiaries of TerrAscend, were extinguished and 22,474,130 TerrAscend Warrants, being all of the previously issued TerrAscend Warrants controlled by Canopy USA (the “Prior Warrants”) were cancelled in exchange for: (i) 24,601,467 TerrAscend Exchangeable Shares at a notional price of $5.10 per TerrAscend Exchangeable Share; and (ii) 22,474,130 new TerrAscend Warrants (the “New Warrants” and, together with the TerrAscend Exchangeable Shares, the “New TerrAscend Securities”) with a weighted average exercise price of $6.07 per TerrAscend Common Share and expiring on December 31, 2032. Following the issuance of the New TerrAscend Securities, Canopy USA beneficially owns: (i) 63,492,037 TerrAscend Exchangeable Shares; (ii) 22,474,130 New Warrants; and (iii) ~~sports nutrition beverages, mixes, protein, gum~~the TerrAscend Option. The TerrAscend Exchangeable Shares can be converted into TerrAscend Common Shares at Canopy USA’s option, subject to the terms of the A&R Protection Agreement (as defined below).

Following the implementation of the Reorganization Canopy USA was determined to be a variable interest entity pursuant to ASC 810 - Consolidations ("ASC 810") and ~~mints, some~~prior to the completion of the Reorganization Amendments (as defined below), Canopy Growth was determined to be the primary beneficiary of Canopy USA. As a result of such determination and in accordance with ASC 810, Canopy Growth consolidated the financial results of Canopy USA.

Following the creation of Canopy USA, Nasdaq communicated its position to us stating that companies that consolidate “the assets and revenues generated from activities in violation under federal law cannot continue to list on Nasdaq”. Since we are committed to compliance with the listing requirements of the Nasdaq, we and Canopy USA effectuated certain changes to the initial structure of the Company’s interest in Canopy USA that were intended to facilitate the deconsolidation of the financial results of Canopy USA within our financial statements. These changes included, among other things, modifying the terms of the Protection Agreement between us, our wholly-owned subsidiary and Canopy USA as well as the terms of Canopy USA’s limited liability company agreement and amending the terms of certain agreements with third-party investors in Canopy USA to eliminate any rights to guaranteed returns (collectively, the “Reorganization Amendments”).

On May 19, 2023, Canopy Growth and Canopy USA implemented the Reorganization Amendments, which included, entering into the First A&R Protection Agreement (as defined below) and amending and restating Canopy USA’s limited liability company agreement (the “A&R LLC Agreement”) in order to: (i) eliminate certain negative covenants that were previously granted by Canopy USA in favor of Canopy Growth as well as delegating to the managers of the Canopy USA Board not appointed by Canopy Growth the authority to approve the following key decisions (collectively, the “Key Decisions”): (a) the annual business plan of Canopy USA; (b) decisions regarding the executive officers of Canopy USA and any of its subsidiaries; (c) increasing the compensation, bonus levels or other benefits payable to any current, former or future employees or managers of Canopy USA or any of its subsidiaries; (d) any other executive compensation plan matters of Canopy USA or any of its subsidiaries; and (e) the exercise of the Wana Options or the Jetty Options, which for greater certainty means that Canopy Growth’s nominee on the Canopy USA Board will not be permitted to vote on any Key Decisions while Canopy Growth owns Non-Voting Shares; (ii) reduce the number of managers on the Canopy USA Board from four to three, including, reducing Canopy Growth’s nomination right to a single manager; (iii) amend the share capital of Canopy USA 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 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, as a result of the Reorganization Amendments, in no circumstances will Canopy Growth, at the time of such conversions, own more than 90% of the Canopy USA Class B Shares.

contained in the Trust SPA be issued Canopy USA Common Shares in two tranches with an aggregate value of up to US$10 million along with warrants of Canopy USA to acquire additional Canopy USA Common Shares. In addition, subject to the terms of the Trust SPA, the Trust has also been granted options to acquire additional Voting Shares (as defined in the A&R LLC Agreement) 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.

In addition, subject to the terms and conditions of the A&R Protection Agreement 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 Canopy Growth common shares issued in the future to the shareholders of Wana and Jetty.

On November 3, 2023, we received a letter from the staff of the SEC (the “Staff”) in which the Staff indicated that, despite the Reorganization Amendments, it would object to the deconsolidation of the financial results of Canopy USA from the Company's financial statements in accordance with U.S. GAAP once Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage. We subsequently had discussions with the Office of Chief Accountant of the SEC (the "OCA") and determined to make certain additional amendments to the structure of Canopy USA (the “Additional Reorganization Amendments”) to facilitate the deconsolidation of Canopy USA from the financial results of Canopy Growth in accordance with U.S. GAAP upon Canopy USA’s acquisition of Wana, Jetty or Acreage. In that regard, we filed a revised preliminary proxy statement with the SEC on each of January 25, 2024 and February 5, 2024 in connection with the Amendment Proposal (as defined below) that discloses these Additional Reorganization Amendments. In connection with the Additional Reorganization Amendments, Canopy USA and its members expect to enter into a second amended and restated limited liability company agreement (the “Second A&R LLC Agreement”) immediately prior to the completion of the first tranche closing of the Trust Transaction. Upon the effective date of the Second A&R LLC Agreement, the terms of the Non-Voting Shares will be amended such that the Non-Voting Shares will only be 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 (the “Triggering Event Date”). Based on our discussions with the OCA, upon effectuating the Additional Reorganization Amendments, we believe that the Staff would not object to the deconsolidation of the financial results of Canopy USA from the Company’s financial statements in accordance with U.S. GAAP once Canopy USA acquires Wana, Jetty or the Fixed Shares of Acreage.

Following the implementation of the Reorganization, the shares and interests in Acreage, Wana, Jetty and TerrAscend are held, directly or indirectly, by Canopy USA, and Canopy Growth no longer holds a direct interest in any shares or interests in such entities, other than the Acreage Option. Canopy Growth holds non-voting and non-participating shares (the "Non-Voting Shares") in the capital of Canopy USA. The Non-Voting Shares do not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy USA. Following the Reorganization Amendments, the Non-Voting Shares are convertible into Class B shares of Canopy USA (the “Canopy USA Class B Shares”), provided that following the execution of the Second A&R LLC Agreement, such conversion shall only be permitted following the Triggering Event Date. Canopy Growth 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”).

As of December 31, 2023, a third party investor owned all of the issued and outstanding Class A shares of Canopy USA (the “Canopy USA Common Shares”) and a wholly-owned subsidiary of Canopy Growth holds Non-Voting Shares in the capital of Canopy USA, representing approximately more than 99% of the issued and outstanding shares in Canopy USA on an as-converted basis.

On October 24, 2022, Canopy USA and Canopy Growth also entered into an agreement with, among others, Nancy Whiteman, the controlling shareholder of Wana, which was amended and restated on May 19, 2023, whereby subsidiaries of Canopy USA agreed to pay additional consideration in order to acquire the Wana Options and the future payments owed in connection with the exercise of the Wana Options will be reduced to US$3.00 in exchange for the issuance of Canopy USA Common Shares and Canopy Growth common shares (the “Wana Amending Agreement”). In accordance with the terms of the Wana Amending Agreement, Canopy USA Common Shares and Canopy Growth common shares will be issued to the shareholders of Wana, each with a value equal to 7.5% of the fair market value of Wana as of the later of: (i) the date that the Wana Options are exercised; and (ii) the closing date of the first tranche of the Trust Transaction (the “Wana Valuation Date”) less any net debt of Wana as of the Wana Valuation Date plus any net cash of Wana as of Wana Valuation Date. The value of Wana and the number of Canopy USA Common Shares will be determined based on the fair market value of Wana and the Canopy USA Common Shares, respectively, as determined by an appraiser appointed by Canopy Growth and an appraiser appointed by the shareholders of Wana (and, if required, a third appraiser to be appointed by the

initial two appraisers). The Canopy USA Common Shares and Canopy Growth common shares will only be issued to Ms. Whiteman, or entities controlled by Ms. Whiteman, on the later of: (i) the date of exercise of the Wana Options and (ii) the date that CBG and Greenstar, indirect, wholly-owned subsidiaries of CBI, have converted their Canopy Growth common shares into Exchangeable Shares. The Wana Amending Agreement may be terminated and no Canopy USA Common Shares or Canopy Growth common shares will be issued to Ms. Whiteman, or entities controlled by Ms. Whiteman in the event that CBG and Greenstar have not converted their Canopy Growth common shares into Exchangeable Shares by the later of: (i) sixty days after the Meeting; or (ii) December 31, 2023. The Canopy USA Common Shares issuable to Ms. Whiteman, or entities controlled by Ms. Whiteman, will also be subject to a repurchase right exercisable at any time after the 36 month anniversary of the closing of the transaction contemplated by the Wana Amending Agreement (the “Wana Repurchase Right”) to repurchase all Canopy USA Common Shares that have been ~~infused~~issued at a price per Canopy USA Common Share equal to the fair market value as determined by an appraiser. As part of this agreement, Canopy USA has granted Ms. Whiteman the right to appoint one member to the Canopy USA Board and a put right on the same terms and conditions as the Wana Repurchase Right.

Canopy Growth and Canopy USA have also entered into 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 ~~hemp-derived CBD isolate,~~their terms, provided that following the execution of the Second A&R LLC Agreement, such conversion shall only be permitted following the Triggering Event 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 in connection with: (a) the Reorganization Amendments (the "First A&R Protection Agreement"); and (b) the Additional Reorganization Amendments (the “Second A&R Protection Agreement” and together with the First A&R Protection Agreement, the “A&R Protection Agreement”).

Upon closing of Canopy USA’s acquisition of Acreage, Canopy Growth will receive additional Non-Voting Shares from Canopy USA in consideration for the issuance of common shares of Canopy Growth that shareholders of Acreage will receive in accordance with the terms of the Existing Acreage Arrangement Agreement and the Floating Share Arrangement Agreement.

On October 24, 2022, Canopy Growth entered into an arrangement agreement with Canopy USA and Acreage, as amended (the “Floating Share Arrangement Agreement”), pursuant to which, subject to approval of the holders of the Floating Shares and the terms and conditions of the Floating Share Arrangement Agreement, Canopy USA will acquire all of the issued and outstanding Floating Shares by way of a court-approved plan on arrangement under the Business Corporations Act (British Columbia) (the “Floating Share Arrangement”) in exchange for 0.045 of a Company common share for each Floating Share held. In connection with the Floating Share Arrangement Agreement, Canopy Growth has irrevocably waived the Acreage Floating Option existing under the Existing Acreage Arrangement Agreement.

On October 24, 2022, Canopy Growth and Canopy USA entered into a third amendment to tax receivable agreement (the “Amended TRA”) with, among others, certain current or former unitholders (the “Holders”) of High Street Capital Partners, LLC, a subsidiary of Acreage (“HSCP”), pursuant to HSCP’s amended tax receivable agreement (the “TRA”) and related tax receivable bonus plans with Acreage. Pursuant to the Amended TRA, Canopy Growth, on behalf of Canopy USA, agreed to issue Canopy Growth common shares with a value of US$30.4 million to certain Holders as consideration for the assignment of such Holder’s rights under the TRA to Canopy USA. As a result of the Amended TRA, Canopy USA is the sole member and beneficiary under the TRA. In connection with the foregoing, Canopy Growth issued: (i) 564,893 common shares with a value of $20.6 million (US$15.2 million) to certain Holders on November 4, 2022 as the first installment under the Amended TRA; and (ii) 710,208 common shares with a value of $20.6 million (US$15.2 million) to certain Holders on March 17, 2023, as the second installment under the Amended TRA. Canopy Growth, on behalf of Canopy USA, also agreed to issue Canopy Growth common shares with a value of approximately US$19.6 million to certain eligible participants pursuant to HSCP’s existing tax receivable bonus plans to be issued immediately prior to completion of the Floating Share Arrangement.

In addition to shareholder and court approvals, the Floating Share Arrangement is subject to approval of the Amendment Proposal and applicable regulatory approvals including, but not limited to, TSX approval and the satisfaction of certain other closing conditions customary in transactions of this nature. The Floating Share Arrangement received the requisite approval from the holders

of Floating Shares at the special meeting of Acreage shareholders held on March 15, 2023 and on March 20, 2023 Acreage obtained a final order from the Supreme Court of British Columbia approving the Floating Share Arrangement. The Floating Share Arrangement Agreement has been amended several times to extend the Exercise Outside Date (as defined in the Floating Share Arrangement Agreement), which was initially March 31, 2023. The most recent amendment to the Floating Share Arrangement Agreement extended the Exercise Outside Date to March 31, 2024. The completion of the Floating Share Arrangement is subject to satisfaction or, if permitted, waiver of certain closing conditions, including, among others, approval of the Amendment Proposal on or prior to the Exercise Outside Date.

It is intended that Canopy Growth’s existing option to acquire the Fixed Shares on the basis of 0.03048 of a Canopy Growth common share per Fixed Share will be exercised after the Meeting 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”). Canopy Growth will not hold any Fixed Shares or Floating Shares. Completion of the acquisition of the Fixed Shares following exercise of the Acreage Option is subject to the satisfaction of certain conditions set forth in the Existing Acreage Arrangement Agreement. The acquisition of the Floating Shares pursuant to the Floating Share Arrangement is anticipated to occur 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 will be owned by Canopy USA on closing of the acquisition of both the Fixed Shares and the Floating Shares.

In connection with the Reorganization, Canopy Growth expects to hold a special meeting of shareholders (the “Meeting”) at which Canopy Growth shareholders will be asked to consider and, if deemed appropriate, to pass a special resolution authorizing an amendment to its articles of incorporation, as amended (the “Amendment Proposal”), in order to: (i) create and authorize the issuance of an unlimited number of a new class of non-voting and non-participating exchangeable shares in the capital of Canopy Growth (the “Exchangeable Shares”); and (ii) restate the rights of Canopy Growth’s common shares to provide for a conversion feature whereby each common share may at any time, at the option of the holder, be converted into one Exchangeable Share. The Exchangeable Shares will not carry voting rights, rights to receive dividends or other rights upon dissolution of Canopy Growth but will be convertible into common shares.

The Amendment Proposal must be approved by at least 66⅔% of the votes cast on a special resolution by Canopy Growth’s shareholders present in person or represented by proxy at the Meeting. On October 24, 2022, CBG and Greenstar, indirect, wholly-owned subsidiaries of CBI, entered into a voting and support agreement (the "Voting and Support Agreement") with Canopy Growth. Pursuant to the terms of the Voting and Support Agreement, CBG and Greenstar agreed, subject to the terms and conditions thereof, among other things, to vote all of the Canopy Growth common shares beneficially owned, directed or controlled, directly or indirectly, by them for the Amendment Proposal.

In the event the Amendment Proposal is approved, and subject to the conversion by CBI of their Canopy Growth common shares into Exchangeable Shares, Canopy USA is expected to exercise the Wana Options and the Jetty Options. In the event the Amendment Proposal is not approved, Canopy USA will not be permitted to exercise its rights to acquire shares of Wana or Jetty, and the Floating Share Arrangement Agreement will be terminated. In such circumstances, Canopy Growth will retain the Acreage Option under the Existing Acreage Arrangement Agreement and Canopy USA will continue to hold the Wana Options and the Jetty Options, as well as the TerrAscend Exchangeable Shares and other securities in the capital of TerrAscend. In addition, Canopy Growth is contractually required to cause Canopy USA to exercise its repurchase right to acquire the Canopy USA Common Shares held by the third party investors.

In connection with the Reorganization, CBI has indicated its current intention to convert all of its Canopy Growth common shares into Exchangeable Shares, conditional upon the approval of the Amendment Proposal. However, any decision to convert will be made by CBI in its sole discretion, and CBI is not obligated to effect any such conversion.

In connection with the foregoing, on October 24, 2022, Canopy Growth entered into a consent agreement with CBG and Greenstar (the “Third Consent Agreement”), pursuant to which the parties agreed, among other things, that following the conversion by CBG and Greenstar of their respective Canopy Growth common shares into Exchangeable Shares, other than the Third Consent Agreement and the termination rights contained therein and the 4.25% unsecured senior notes due in 2023 (the “Canopy Notes”) held by Greenstar, all agreements between Canopy Growth and CBI, including the Second Amended and Restated Investor Rights Agreement, dated as of April 18, 2019, by and among certain wholly-owned subsidiaries of CBI and Canopy Growth (the “Second Amended and Restated Investor Rights Agreement”), will be terminated. Pursuant to the terms of the Third Consent Agreement, CBG and Greenstar also agreed, among other things, that at the time of the conversion by CBG and Greenstar of their Canopy Growth common shares into Exchangeable Shares, (i) CBG will surrender the warrants held by CBG to purchase 13,974,545 common shares for cancellation for no consideration; and (ii) all nominees of CBI that are currently sitting on the board of directors of Canopy Growth (the “Board”) will resign from the Board. In addition, pursuant to the Third Consent Agreement and following the Reorganization Amendments, Canopy Growth is contractually required to convert its Non-Voting Shares into Canopy USA Class B Shares, provided that following the execution of the Second A&R LLC Agreement, such conversion shall only be permitted following the Triggering Event Date, and cause Canopy USA to repurchase the Canopy USA Common Shares held by certain third-party investors in Canopy USA in the event CBG and Greenstar have not converted their respective common shares into Exchangeable Shares by sixty days after the Meeting (the “Termination Date”). The Third Consent Agreement will automatically terminate on the Termination Date.

In the event that CBI does not convert its Canopy Growth common shares into Exchangeable Shares, Canopy USA will not be permitted to exercise its rights to acquire the Fixed Shares from Canopy Growth or exercise its rights under the Wana Options or Jetty Options and the Floating Share Arrangement Agreement will be terminated. In such circumstances, Canopy Growth will retain the Acreage Option under the Existing Acreage Arrangement Agreement and Canopy USA will continue to hold the Wana Options and the Jetty Options, as well as the TerrAscend Exchangeable Shares and other securities in the capital of TerrAscend. If CBI does not convert its Canopy Growth common shares into Exchangeable Shares, Canopy Growth is also contractually required to cause Canopy USA to exercise its repurchase right to acquire the Canopy USA Common Shares held by the third party investors.

On April 13, 2023, we entered into an exchange agreement (the “April 2023 Exchange Agreement”) with Greenstar in order to acquire and cancel $100.0 million aggregate principal amount of our outstanding Canopy Notes. Pursuant to the April 2023 Exchange Agreement, we agreed to acquire and cancel $100.0 million aggregate principal amount of the Canopy Notes held by Greenstar in exchange for: (i) a cash payment to Greenstar in the amount of the unpaid and accrued interest owing under the Canopy Notes held by Greenstar; and (ii) a promissory note of $100.0 million maturing December 31, 2024 bearing interest at a rate of 4.25% per annum, payable in cash on maturity (the “CBI Note”). As a result, Greenstar no longer holds any Canopy Notes.

On May 30, 2023, we entered into a license assignment and assumption agreement with Indiva Limited ("Indiva") and its subsidiary, Indiva Inc. (the "Indiva License Agreement"), allowing us to assume the exclusive rights and interests to manufacture, distribute, and sell Wana branded products in Canada. Simultaneously, we and Indiva also entered into a contract manufacturing agreement, under which we will grant Indiva the exclusive right to manufacture and supply Wana branded products in Canada for five years, with the ability to renew for an additional five-year term upon mutual agreement of the parties.

We also subscribed for 37.2 million common shares of Indiva for an aggregate purchase price of $2.2 million. In addition, we paid Indiva $0.5 million in cash on May 30, 2023, and agreed to pay Indiva an additional $1.3 million on May 30, 2024 provided that the parties are complying with the terms of the Indiva License Agreement (collectively, the "Indiva Investment").

On June 29, 2023, we entered into privately negotiated exchange agreements (the "June 2023 Exchange Agreements") with certain holders (the "Noteholders") of the Canopy Notes to acquire and cancel $12.5 million aggregate principal amount of the Canopy Notes from the Noteholders in exchange for cash, including accrued and unpaid interest owing under the Canopy Notes, and the issuance of approximately 2.43 million Canopy Growth common shares (the "June 2023 Exchange Transaction").

On February 21, 2023, we entered into a subscription agreement (the “Convertible Debenture Agreement”) with an institutional investor (the “Institutional Investor”) pursuant to which the Institutional Investoragreed to purchase up to US$150.0 million aggregate principal amount of senior unsecured convertible debentures (“Convertible Debentures”) in a registered direct offering. The Convertible Debentures were issued under the indenture dated February 21, 2023 between us and Computershare Trust Company of Canada, in its capacity as trustee. Pursuant to the Convertible Debenture Agreement, an initial $135.2 million (US$100.0 million) aggregate principal amount of the Convertible Debentures were sold to the Institutional Investor on February 21, 2023. The conditions with respect to the remaining US$50 million aggregate principal amount of the Convertible Debentures were neither satisfied nor waived. The Convertible Debentures were convertible into our common shares at the option of the Institutional Investor at any time or times prior to the maturity date of February 28, 2028, at a conversion price equal to 92.5% of the volume-weighted average price of our common shares during the three consecutive trading days ending on the business day immediately prior to the date of conversion. No cash payment or any other property of Canopy Growth was made by ~~BioSteel;~~us to the Institutional Investor in connection with, or as a result of, the issuance, conversion or repayment of the Convertible Debentures.

As of June 30, 2023, all conversions pursuant to the Convertible Debentures were completed and the amount outstanding under the Convertible Debentures was $nil.

On July 13, 2023, we entered into privately negotiated redemption agreements (collectively, the “Redemption Agreements”) with certain Noteholders of our Canopy Notes, pursuant to which approximately $193 million aggregate principal amount of the outstanding Canopy Notes held by such Noteholders were redeemed (the "Redemption") on the applicable closing date for: (i) an aggregate cash payment of approximately $101 million; (ii) the issuance of 9.04 million Canopy Growth common shares; and (iii) the issuance of approximately $40.4 million aggregate principal amount of newly issued unsecured non-interest bearing convertible debentures (the "Debentures"). Following the Redemption, we settled the remaining aggregate principal amount owing under the outstanding Canopy Notes and, as of the maturity date, there were no Canopy Notes outstanding.

The Debentures were issued pursuant to a debenture indenture dated July 14, 2023 between us and Odyssey Trust Company, in its capacity as trustee. The Debentures were convertible into Canopy Growth common shares (the “Debenture Shares”) at the option of the holder at any time or times following approval from our shareholders for the issuance of all the Debenture Shares in excess of the Nasdaq threshold of 19.99% and the TSX requirements of 25% of the issued and outstanding Canopy Growth common shares in accordance with the applicable rules and regulations of Nasdaq and the TSX (the "Shareholder Approval") until the maturity date of January 15, 2024, at a conversion price equal to $5.50, subject to adjustment in certain events.

We obtained Shareholder Approval, at our Annual General and Special Meeting of shareholders held on September 25, 2023. As of September 30, 2023, all conversions pursuant to the Debentures have been completed and the amount outstanding under the Debentures was $nil.

On October 24, 2022, we entered into agreements with certain of our lenders under the term loan credit agreement dated March 18, 2021 (the “Credit Agreement”) pursuant to which we agreed to purchase in the aggregate US$187.5 million of the principal indebtedness outstanding under the Credit Facility at a discounted price of US$930 per US$1,000 or US$174.4 million in the aggregate. The first payment, which was oversubscribed, in the amount of $117.5 million (US$87.9 million) was made on November 10, 2022 to reduce the principal indebtedness under the Credit Facility by approximately $126.3 million (US$94.4 million). The second payment of $116.8 million (US$87.2 million) was made on April 17, 2023 to reduce principal indebtedness under the Credit Facility by $125.6 million (US$93.8 million). Additionally, on October 24, 2022 we and certain of our lenders agreed to make certain amendments to the Credit Agreement which, among other things, resulted in: (i) a reduction to the minimum liquidity covenant to no less than US$100.0 million following completion of the second principal repurchase on April 17, 2023; (ii) certain changes to the application of net proceeds from asset sales; (iii) the establishment of a new committed delayed draw term credit facility in an aggregate principal amount of US$100.0 million; and (iv) the elimination of the additional US$500.0 million incremental term loan facility.

On July 13, 2023, we entered into agreements with certain of our lenders under the Credit Agreement pursuant to which certain additional amendments were made to the Credit Agreement (collectively, the Credit Agreement, as amended as of July 13, 2023, is referred to herein as the “Amended Credit Agreement”). The Amended Credit Agreement required us to prepay or repurchase principal indebtedness under the Credit Facility in an amount equal to the US dollar equivalent of $93.0 million at a discounted price of US$930 per US$1,000 (the “July 2023 Paydown”). In addition, the Amended Credit Agreement requires us to apply certain net

proceeds from asset sales to prepay or repurchase principal indebtedness under the Credit Facility and receive principal reductions at, in certain circumstances, a discounted price of US$950 per US$1,000. The Amended Credit Agreement also includes, among other ~~strategic revenue sources~~things, amendments to the minimum liquidity covenant such that the US$100.0 million minimum ceased to apply concurrently with the July 2023 Paydown. The July 2023 Paydown was made on July 21, 2023.

On each of August 11, 2023 and September 14, 2023, pursuant to the terms of the Amended Credit Agreement, we repurchased additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales (the “Second Quarter 2024 Paydowns”). The Second Quarter 2024 Paydowns resulted in an aggregate principal reduction of $73.3 million (US$54.5 million) for a cash payment of $69.6 million (US$51.8 million).

On each of November 28, 2023 and December 27, 2023, pursuant to the terms of the Amended Credit Agreement, we repurchased and repaid, as ~~our clinic partners.~~applicable, additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales (the "Third Quarter 2024 Paydowns"). The Third Quarter 2024 Paydowns resulted in an aggregate principal reduction of $65.4 million (US$48.5 million) for a cash payment of $63.2 million (US$46.9 million).

On September 18, 2023, we entered into subscription agreements (the “Subscription Agreements”) with certain institutional investors (the “Investors”). Pursuant to the terms of the Subscription Agreements, we issued 2,292,947 units of the Company (the “Units”) to the Investors at a price per Unit of US$10.90 for aggregate gross proceeds of approximately $33.7 million (US$25.0 million) (the “Unit Offering”). Each Unit is comprised of one Canopy Growth common share and one common share purchase warrant (a “Warrant”). Each Warrant entitles the holder to acquire one Canopy Growth common share at a price per share equal to US$13.50 for a period of five years from the date of issuance. The Unit Offering closed on September 19, 2023.The Investors also held an over-allotment option to acquire up to an additional 2,292,947 Units at a price per Unit of US$10.90 for aggregate gross proceeds of approximately US$25.0 million at the discretion of the Investors at any time on or before November 2, 2023 (the “Over-Allotment Option”). The Over-Allotment Option was not exercised by the Investors and expired on November 2, 2023.

On January 18, 2024, we entered into subscription agreements (the "January 2024 Subscription Agreements") with certain institutional investors (the "January 2024 Investors"). Pursuant to the terms of the January 2024 Subscription Agreements, we issued 8,158,510 units of the Company (the "January 2024 Units") to the January 2024 Investors at a price per January 2024 Unit of US$4.29 for aggregate gross proceeds of approximately $47.1 million (US$35.0 million) (the "January 2024 Unit Offering"). Each January 2024 Unit is comprised of (a) one Canopy Growth common share and (b)(i) one Series A common share purchase warrant (a "Series A Warrant") or (ii) one Series B common share purchase warrant (a "Series B Warrant" and, together with the Series A Warrants, the "January 2024 Warrants"). Each January 2024 Warrant entitles the holder to acquire one Canopy Growth common share from the Company at a price per share equal to US$4.83. The Series A Warrants are currently exercisable and will remain exercisable until January 19, 2029, and the Series B Warrants will be exercisable for a period commencing on July 19, 2024 until July 19, 2029. The January 2024 Unit Offering closed on January 19, 2024.

On December 13, 2023, the Company announced that the Board had approved the consolidation of the Company’s issued and outstanding common shares on the basis of one post-consolidation common share for every 10 pre-consolidation common shares (the “Share Consolidation”). The Share Consolidation was implemented to ensure that the Company continues to comply with the listing requirements of the Nasdaq Global Select Market.

All issued and outstanding common shares, per share amounts, and outstanding equity instruments and awards exercisable into common shares, as well as the exchange ratios for the Fixed Shares and the Floating Shares under the Acreage Amending Agreement and the Floating Share Arrangement Agreement, respectively, contained in the condensed interim consolidated financial statements of the Company and notes thereto have been retroactively adjusted to reflect the Share Consolidation for all prior periods presented.

On December 18, 2023, the Company entered into an agreement to divest all of its interest in This Works to a London-based investment firm (the “This Works Divestiture”). The Company completed the This Works Divestiture on December 18, 2023, pursuant to which the Company received a cash payment of $2,249 (£1,333) and a loan note of $5,240 (£3,106) with a maturity date of December 18, 2027. The Company will also be entitled to an earnout payment of up to $5,905 (£3,500), subject to certain financial targets.

The results of operations presented below reports the financial performance of the continuing operations of Canopy Growth in the three and nine month periods ending December 31, 2023. Further to Note 4 in the Company’s accompanying financial statements, the BioSteel segment results for all periods prior to the September 14, 2023 and November 16, 2023, being the effective dates of deconsolidation as a result of the CCAA Proceedings, are classified as discontinued operations and therefore are excluded from continuing operations.

We report net revenue in four segments: (i) Canada cannabis; (ii) rest-of-world cannabis; (iii) Storz & Bickel; and (iv) This Works. Revenue derived from the ~~first~~remainder of our operations are included within "other". The following table presents segmented net revenue for the three months ended December 31, 2023 and 2022:

Net revenue was $78.5 million in the third quarter of fiscal ~~2021 was $32.1~~2024, a decrease of $6.3 million as compared to ~~$18.8~~$84.9 million in the ~~first~~third quarter of fiscal ~~2020.~~2023.

Net revenue from our Canada cannabis segment was $39.0 million in the third quarter of fiscal 2024, as compared to $46.6 million in the third quarter of fiscal 2023.

Canadian adult-use cannabis net revenue was $23.4 million in the third quarter of fiscal 2024, as compared to $32.6 million in the third quarter of fiscal 2023.

Canadian medical cannabis net revenue was $15.6 million in the third quarter of fiscal 2024, as compared to $14.1 million in the third quarter of fiscal 2023. The year-over-year increase is primarily attributable to an increase in the average size of medical orders placed by our customers due largely to a shift in our customer mix, and a larger assortment of cannabis product choices offered to our customers.

Rest-of-world cannabis revenue ~~from~~ was $10.5 million in the third quarter of fiscal 2024, as compared to $5.8 million in the third quarter of fiscal 2023. The year-over-year increase is attributable to growth in Germany, Poland and Czech Republic driven by increased shipments of high quality flower products as well as continued strong growth in our Australian medical business.

Storz & Bickel ~~and a full quarter of revenue contribution from both This Works (acquired in May 2019) and BioSteel (acquired in October 2019).~~

Revenue from Storz & Bickel was ~~$17.1~~$18.5 million in the current quarter, a year-over-year increase of $7.4 million due to stronger-than-expected sales performance and an expansion of our distribution network in the United States. Additionally, This Works contributed a fullthird quarter of ~~revenue totaling $6.0~~fiscal 2024, as compared to $20.2 million in the ~~current~~third quarter aof fiscal 2023. The year-over-year ~~increase~~decrease is primarily attributable to production constraints and ramp-up of ~~$3.7 million.~~ newly launched portable vaporizer in the second quarter of fiscal 2024.

Revenue from This Works was $8.2 million in the third quarter of fiscal 2024, as compared to $8.3 million in the third quarter of fiscal 2023. The year-over-year revenue is slightly lower due to the completion of the This Works Divestiture on December 18, 2023.

The following table presents cost of goods sold, gross margin and gross margin percentage on a consolidated basis for the three months ended December 31, 2023 and 2022:

Cost of goods sold was $50.3 million in the ~~first~~third quarter of fiscal ~~2021 was $103.9 million,~~2024, as compared to ~~$72.2~~$79.6 million in the ~~first~~third quarter of fiscal ~~2020.~~2023. Our gross margin was $28.2 million in the ~~first~~third quarter of fiscal ~~2021 was $6.5 million,~~2024, or 6%36% of net revenue, as compared to a gross margin of ~~$18.3~~$5.2 million and gross margin percentage of ~~20%~~6% of net revenue in the ~~first~~third quarter of fiscal ~~2020. In~~2023. The year-over-year increase in the ~~first quarter of fiscal 2021, our~~ gross margin percentage ~~was adversely impacted by~~is primarily attributable to:

We report gross margin and gross margin percentage in four segments: (i) Canada cannabis; (ii) rest-of-world cannabis; (iii) Storz & Bickel; and (iv) This Works. Cost of sales associated with the remainder of our operations are included within "other". The following table presents segmented gross margin and gross margin percentage for the three months ended December 31, 2023 and 2022:

Gross margin for our Canada cannabis segment was $11.1 million in the third quarter of fiscal 2024, or 28% of net revenue, as compared to $(5.3) million in the third quarter of fiscal 2023, or (11%) of net revenue. The year-over-year increase in ~~production from~~the gross margin percentage was primarily attributable to: (i) the realized benefit of our ~~greenhouse~~cost savings program and strategic changes to our business that

were initiated in ~~Mirabel, Quebec.~~ the fourth quarter of fiscal 2022 and the fourth quarter of fiscal 2023; (ii) a year-over-year decrease in write-downs of excess inventory; and (iii) opportunistic utilization of lower cost inputs;

Gross margin for our rest-of-world cannabis segment was $4.2 million in the third quarter of fiscal 2024, or 40% of net revenue, as compared to $(2.2) million in the third quarter of fiscal 2023, or (37%) of net revenue. The year-over-year increase in the gross margin percentage is primarily attributable to additional variable consideration recognized in respect of our U.S. CBD business and a downward adjustment related to a customer in an exited international market in the third quarter of fiscal 2023. Both items did not recur in the third quarter of fiscal 2024.

Gross margin for our Storz & Bickel segment was $9.4 million in the third quarter of fiscal 2024, or 51% of net revenue, as compared to $9.2 million in the third quarter of fiscal 2023, or 45% of net revenue. The year-over-year increase in the gross margin percentage is driven primarily by lower input costs and a positive shift in product mix to higher-margin newly launched products.

Gross margin for our This Works segment was $4.3 million in the third quarter of fiscal 2024, or 52% of net revenue, as compared to $4.0 million in the third quarter of fiscal 2023, or 49% of net revenue. The year-over-year increase in the gross margin percentage is primarily due to lower excess and obsolete inventory charges in the third quarter of fiscal 2024.

Three months ended June 30,

(in thousands of Canadian dollars)

2020

2019

$ Change

% Change

Operating expenses

General and administrative

$
64,827

$
63,288

$
1,539

2
%
Sales and marketing

37,769

50,547

(12,778
)

(25
%)
Research and development

13,659

8,490

5,169

61
%
Acquisition-related costs

1,394

13,182

(11,788
)

(89
%)
Depreciation and amortization

17,743

10,140

7,603

75
%
Selling, general and administrative expenses

135,392

145,647

(10,255
)

(7
%)

Share-based compensation

28,559

77,081

(48,522
)

(63
%)
Share-based compensation related to
acquisition milestones

2,126

10,281

(8,155
)

(79
%)
Share-based compensation expense

30,685

87,362

(56,677
)

(65
%)

Asset impairment and restructuring costs

12,794

-

12,794

-

Total operating expenses

$
178,871

$
233,009

$
(54,138
)

(23
%)

The following table presents operating expenses for the three months ended December 31, 2023 and 2022:

Selling, general and administrative expenses were $54.4 million in the ~~first~~third quarter of fiscal ~~2021 were $135.4 million,~~2024, as compared to ~~$145.6~~$89.6 million in the ~~first~~third quarter of fiscal ~~2020.~~2023.

General and administrative expense was $22.7 million in the ~~first~~third quarter of fiscal ~~2021 was $64.8 million, relatively consistent with $63.3~~2024, as compared to $31.3 million in the ~~first~~third quarter of fiscal ~~2020.~~

Sales and marketing expense in the first quarter of fiscal 2021 was $37.8 million, as compared to $50.5 million in the first quarter of fiscal 2020. In the comparative period we incurred costs attributable to (i) creative design, brand insights and product marketing campaigns in preparation for the launch of our Cannabis 2.0 portfolio of products, and (ii) media and advertisement placement campaigns to drive brand awareness and educate consumers in support of our Tweed, Tokyo Smoke and other recreational brands at the onset of the opening of the Canadian recreational market in October 2018. These costs did not recur to the same extent in the first quarter of fiscal 2021. Additionally, in the current quarter, as a result of the COVID-19 pandemic and the associated measures established to contain its spread, we delayed or cancelled various product and brand marketing initiatives that were planned for retail stores across Canada, and incurred significantly reduced travel costs due to travel restrictions.

The above factors resulting in a year-over-year decrease in sales and marketing expense were partially offset by higher compensation costs related to our marketing and sales capabilities servicing (i) the United States market, where initiatives continue to commercialize and drive brand and product awareness for our First & Free line of CBD products; and (ii) the growth in our business as compared to the first quarter of fiscal 2020 resulting from the acquisitions of C³ ~~in April 2019, This Works in May 2019 and BioSteel in October 2019.~~

Research and development expense in the first quarter of fiscal 2021 was $13.7 million, as compared to $8.5 million in the first quarter of fiscal 2020. The year-over-year increase is primarily attributable to (i) higher compensation costs associated with a year-over-year increase in the number of employees conducting research and developing patent-protected technology, most notably in relation to our Cannabis 2.0 products and plant science; and (ii) a year-over-year increase in costs associated with conducting external laboratory research, testing and clinical trials for CBD- and other cannabinoid-based human and animal health products and therapies. The above factors resulting in a year-over-year increase in research and development expense were partially offset by lower travel costs resulting from COVID-19 related travel restrictions, and lower third-party professional fees associated with a refocusing of Spectrum Therapeutics’ research objectives.

~~Acquisition-related costs in the first quarter of fiscal 2021 were $1.4 million, as compared to $13.2 million in the first quarter of fiscal 2020.~~2023. The year-over-year decrease is primarily attributable to ~~more mergers~~the impact of the restructuring actions and ~~acquisitions activity~~cost savings programs initiated in the fourth quarters of both fiscal 2022 and fiscal 2023. We realized reductions relative to the third quarter of fiscal 2023 primarily in relation to: (i) compensation costs for finance, information technology, legal and other administrative functions; and (ii) a reduction in facilities and insurance costs.

Sales and marketing expense was $18.3 million in the third quarter of fiscal 2024, as compared to $32.4 million in the third quarter of fiscal 2023. The year-over-year decrease is primarily attributable to: (i) the divestiture of our retail business in Canada in the third quarter of fiscal 2023; (ii) cost reductions related to the previously-noted restructuring actions and cost savings programs, which resulted in a rationalization of our sales and marketing spending in certain areas of our business, particularly for our Canadian cannabis and U.S. CBD businesses, and a reduction in compensation costs.

Research and development expense was $1.3 million in the third quarter of fiscal 2024, as compared to $4.9 million in the third quarter of fiscal 2023. The year-over-year decrease is primarily attributable to cost reductions associated with the previously-noted restructuring actions and cost savings programs, as we: (i) continued to realize reductions in compensation costs and curtail research and development projects; and (ii) shifted to outsourced contract model for certain research and development projects.

Acquisition, divestiture, and other costs were $5.0 million in the third quarter of fiscal 2024, as compared to $13.3 million in the third quarter of fiscal 2023. In the third quarter of fiscal 2024, costs were incurred primarily in relation to:

Comparatively, in the third quarter of fiscal 2023, costs were incurred primarily in relation to the Reorganization, the divestiture of certain of our corporate-owned retail stores in Canada, and evaluating other potential acquisition opportunities.

Depreciation and amortization expense was $7.1 million in the third quarter of fiscal 2024, as compared to $7.6 million in the third quarter of fiscal 2023. The year-over-year decrease is primarily attributable to: (i) the previously-noted restructuring actions and cost savings programs, including the closure of certain of our Canadian facilities and other operational changes to implement cultivation-related efficiencies and improvements in the Canadian adult-use cannabis business; and (ii) the divestiture of our retail business in Canada in the third quarter of fiscal 2023.

Share-based compensation expense was $3.7 million in the third quarter of fiscal 2024, as compared to $6.1 million in the third quarter of fiscal 2023. The year-over-year decrease is primarily attributable to the impact of our previously-noted restructuring actions, which resulted in forfeitures of stock options, restricted share units and performance units and results in lower relative expenses in future periods. While 2.4 million stock options were granted in the first quarter of fiscal ~~2020, most notably entering into~~2024 and ~~implementing the Arrangement Agreement with Acreage and closing the acquisitions of C3 and This Works. Comparatively,~~1.5 million restricted share units were granted in the ~~first~~second quarter of fiscal ~~2021 our primary mergers~~2024, the associated expense relating to both items partially offset the decrease noted.

Loss on asset impairment and ~~acquisitions activity related to entering the Proposal Agreement~~restructuring

Loss on asset impairment and ~~Amended Arrangement with Acreage, as described~~restructuring recorded in ~~“Recent Developments” above.~~

~~Depreciation and amortization expense~~operating expenses were $30.4 million in the ~~first~~third quarter of fiscal ~~2021 was $17.7 million,~~2024, as compared to ~~$10.1~~$22.3 million in the ~~first~~third quarter of fiscal ~~2020. The year-over-year increase is~~2023.

Loss on asset impairment and restructuring recorded in the third quarter of fiscal 2024 were primarily ~~attributable~~related to ~~substantial~~the charges associated with the completion of the ~~build-out~~This Works Divestiture, as $28.1 million of ~~our infrastructure across Canada over~~write-downs occurred due to the ~~past year, investment in our infrastructure in Europe~~sale. In addition, there were various incremental impairment losses and ~~the United States, and the growth in our business over the past year~~other costs associated with ~~the acquisitions of C~~³~~, BioSteel and This Works.~~

Share-based compensation expense in the first quarter of fiscal 2021 was $28.6 million, as compared to $77.1 million in the first quarter of fiscal 2020. The year-over-year decrease is primarily attributable to:

Share-based compensation expense related to acquisition milestones in the first quarter of fiscal 2021 was $2.1 million, as compared to $10.3 million in the first quarter of fiscal 2020. The year-over-year decrease is primarily related to (i) the restructuring of our Canadian cannabis operations ~~in Colombia~~that were initiated in the ~~fourth~~three months ended March 31, 2023.

Comparatively, in the third quarter of fiscal ~~2020, which resulted in~~2023, the acceleration of share-based compensation expense related to the unvested milestones associated with the acquisitions of Spectrum Colombia and Canindica. As a result, there is no remaining share-based compensation expense to be recognized in association with the Spectrum Colombia acquisition and only a minimal amount was recognized in connection with the Canindica acquisition in the current quarter; and (ii) the achievement, in earlier quarters, of major milestones associated with the acquisitions of Spectrum Colombia, Canindica, and Spectrum Cannabis Denmark Aps, which had resulted in the recognition of share-based compensation expense at that time.

Asset impairment and restructuring costs recorded in operating expenses in the first quarter of fiscal 2021 were $12.8 million. In the first quarter of fiscal 2021, we completed certain of the restructuring actions that had commenced in the previous fiscal year, and recorded final adjustments related to changes in certain estimates recorded at March 31, 2020. In addition, we incurred additional costs in the first quarter of fiscal 2021 related primarily to the rationalization of our marketing organization in April 2020. As a result, in the first quarter of fiscal 2021 we recognizedloss on asset impairment and restructuring ~~costs in relation~~were primarily related to:

The following table presents other income (expense), net, and income tax expense for the ~~exit of the Company’s operations in South Africa~~three months ended December 31, 2023 and ~~Lesotho; and (iii) employee-related costs associated with rationalizing certain marketing activities.~~

The loss from equity method investments in the first quarter of fiscal 2021 was $7.2 million, as compared to $1.8 million in the first quarter of fiscal 2020. The year-over-year increase in the loss is primarily attributable to larger net losses incurred by PharmHouse and Agripharm relative to the prior year, which is predominantly related to current quarter business performance.

Other income (expense), net was an expense amount of $171.0 million in the ~~first~~third quarter of fiscal ~~2021 was $48.2 million,~~2024, as compared to ~~$32.8~~an expense amount of $115.5 million in the ~~first~~third quarter of fiscal ~~2020.~~2023. The year-over-year ~~increase~~change of ~~$15.4~~$55.5 million is primarily attributable to:

These fair value decreases were partially offset by fair value increases related to our investments in:

Comparatively, the expense amount in the third quarter of fiscal 2023 was primarily attributable to fair value decreases relating to our investments in: (i) the TerrAscend Exchangeable Shares ($31.5 million); (ii) the New Warrants ($17.5 million); (iii) the Acreage call option ($35.0 million); (iv) the Wana financial instrument ($16.2 million); and (v) the Jetty financial instrument ($10.2 million). The fair value decreases were partially offset by fair value increases associated with the secured debentures issued by TerrAscend Canada and Arise Bioscience and the associated Prior Warrants, up to the closing of the transactions contemplated in connection with the Debt Settlement Agreement (totaling $9.9 million).

Income tax recovery in the ~~first~~third quarter of fiscal ~~2021~~2024 was ~~$3.0~~$1.1 million, compared to income tax ~~expense~~recovery of ~~$10.3~~$1.3 million in the ~~first~~third quarter of fiscal ~~2020.~~2023. In the ~~first~~third quarter of fiscal ~~2021, the~~2024, income tax recovery consisted of a deferred income tax recovery of ~~$2.1~~$0.6 million (compared to a recovery of $1.8 million in the third quarter of fiscal 2023) and current income tax recovery of $0.5 million (compared to an expense of ~~$8.3~~$0.5 million in the ~~first~~third quarter of fiscal ~~2020) and current income tax recovery~~2023).

The decrease of ~~$0.9 million (compared to an expense of $2.0 million in the first quarter of fiscal 2020).~~

~~The increase of $10.4~~$1.2 million in the deferred income tax recovery is primarily a result of ~~(i) recording a reduction~~change in deferred tax liabilities that arose in connection with the required revaluation of the accounting carrying value, but not the tax basis, of property, plant and equipment, intangible assets, and other financial ~~assets; and (ii) the recognition of losses carried forward~~assets, net of ~~the use of losses carried forward from prior years for which a deferred tax asset had been recorded. In connection with certain~~ deferred tax assets ~~mainly~~recognized in ~~respect of losses for tax purposes,~~the quarter where the accounting criteria for recognition of an asset has ~~yet to be satisfied and it is not probable that they will be used, the deferred tax asset has not~~ been ~~recognized.~~satisfied.

The increase of ~~$2.9~~$1.0 million in ~~the~~ current income tax recovery arose primarily as a result of the reduction in ~~connection with legal entities that generated losses during~~ the ~~current period that will be used to reduce prior years’ income for tax purposes, and acquired~~number of legal entities that generated income for tax ~~purposes during prior periods that could not be reduced by the group’s tax attributes but whose current period income will now be reduced by the group’s tax attributes.~~purposes.

~~Net~~The net loss from continuing operations in the ~~first~~third quarter of fiscal ~~2021~~2024 was ~~$128.3~~$230.3 million, as compared to ~~$194.1~~a net loss of $226.8 million in the ~~first~~third quarter of fiscal ~~2020.~~2023. The ~~decrease~~year-over-year increase in the net loss is primarily attributable toto: (i) the year-over-year increase in loss on asset impairment and restructuring; (ii) the year-over-year change in other income (expense), net, of $55.5 million; and (iii) offset by the decrease in ~~operating expenses~~selling, general and ~~the other~~administrative expenses. These variances are described above.

In the first quarters of fiscal 2021 and fiscal 2020, all of our revenue was earned by the Cannabis, Hemp and Other Consumer Products segment. Canopy Rivers contributed a net loss of $5.3 million in the first quarter of fiscal 2021, of which $1.5 million was attributable to Canopy Growth. In the first quarter of fiscal 2020, Canopy Rivers contributed a net loss of $3.3 million, of which $0.9 million was attributable to Canopy Growth. The increase in the net loss reflects changes in the fair value or carrying value of Canopy Rivers’ strategic equity investments.

Our “Adjusted EBITDA” is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management calculates Adjusted EBITDA as the reported net ~~loss,~~income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; (gain)/loss on asset impairment and restructuring; restructuring ~~costs;~~costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove ~~acquisition-related~~acquisition, divestiture, and other costs. Asset impairments related to periodic changes to our supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. Accordingly, management believes that Adjusted EBITDA provides meaningful and useful financial information, as this measure demonstrates the operating performance of businesses.

The following table presents Adjusted EBITDA for the three months ended ~~June 30, 2020~~December 31, 2023 and ~~2019:~~2022:

The Adjusted EBITDA loss in the ~~first~~third quarter of fiscal ~~2021~~2024 was ~~$92.2~~$9.0 million, ~~relatively consistent with the~~as compared to an Adjusted EBITDA loss of ~~$93.4~~$49.7 million in the third quarter of fiscal 2023. The year-over-year decrease in Adjusted EBITDA loss is primarily attributable to the year-over-year increase in our gross margin and the year-over-year decrease in our selling, general and administrative expenses.

We report net revenue in four segments: (i) Canada cannabis; (ii) rest-of-world cannabis; (iii) Storz & Bickel; and (iv) This Works. Revenue derived from the remainder of our operations are included within "other". The following table presents segmented net revenue for the nine months ended December 31, 2023 and 2022:

Net revenue was $224.4 million in the nine months ended December 31, 2023, a decrease of $40.7 million as compared to $265.0 million in the nine months ended December 31, 2022.

Net revenue from our Canada cannabis segment was $116.6 million in the nine months ended December 31, 2023, as compared to $151.3 million in the nine months ended December 31, 2022.

Canadian adult-use cannabis net revenue was $71.6 million in the nine months ended December 31, 2023, as compared to $109.6 million in the nine months ended December 31, 2022.

Canadian medical cannabis net revenue was $45.0 million in the nine months ended December 31, 2023, as compared to $41.7 million in the nine months ended December 31, 2022. The year-over-year increase is primarily attributable to an increase in the average size of medical orders placed by our customers due largely to a shift in our customer mix, and a larger assortment of cannabis product choices offered to our customers.

Rest-of-world cannabis revenue was $29.7 million in the nine months ended December 31, 2023, as compared to $30.2 million in the nine months ended December 31, 2022. The year-over-year decrease is attributable to:

Revenue from Storz & Bickel was $48.5 million in the nine months ended December 31, 2023, as compared to $49.4 million in the nine months ended December 31, 2022. The year-over-year decrease is primarily attributable to production constraints and ramp-up of newly launched portable vaporizer in the second quarter of fiscal 2024, offset by the expansion of our distribution and retail channels in the United States, helped by favorable foreign currency translation.

Revenue from This Works was $21.3 million in the nine months ended December 31, 2023, as compared to $20.7 million in the nine months ended December 31, 2022. The year-over-year increase is primarily attributable to an expanded product portfolio in our "Bodycare" line and continued success and strengthening sales velocity of our "In Transit" skincare product lineup, further supported by favorable foreign currency translations, slightly offset by the completion of the This Works Divestiture on December 18, 2023.

The following table presents cost of goods sold, gross margin and gross margin percentage on a consolidated basis for the nine months ended December 31, 2023 and 2022:

Cost of goods sold was $158.9 million in the nine months ended December 31, 2023, as compared to $264.2 million in the nine months ended December 31, 2022. Our gross margin was $65.4 million in the nine months ended December 31, 2023, or 29% of net revenue, as compared to a gross margin of $0.8 million and gross margin percentage of 0% of net revenue in the nine months ended December 31, 2022. The year-over-year increase in the gross margin percentage is primarily attributable to:

The factors above, resulting in a year-over-year increase in our gross margin percentage, were partially offset by a decrease in the amount of payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program, from $1.6 million in the nine months ended December 31, 2022 to $nil in the nine months ended December 31, 2023.

Gross margin for our Canada cannabis segment was $24.7 million in the nine months ended December 31, 2023, or 21% of net revenue, as compared to $(25.5) million in the nine months ended December 31, 2022, or (17%) of net revenue. The year-over-year increase in the gross margin percentage was primarily attributable to: (i) the realized benefit of our cost savings program and strategic changes to our business that were initiated in the fourth quarter of fiscal 2022 and the fourth quarter of fiscal 2023; (ii) a year-over-year decrease in write-downs of excess inventory; and (iii) capturing of value from previously identified excess inventory. These increases were partially offset by a decrease in the amount of payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program, from $1.6 million in the nine months ended December 31, 2022 to $nil in the nine months ended December 31, 2023.

Gross margin for our rest-of-world cannabis segment was $10.4 million in the nine months ended December 31, 2023, or 35% of net revenue, as compared to $(3.7) million in the nine months ended December 31, 2022, or (12%) of net revenue. The year-over-year increase in the gross margin percentage is primarily attributable to an improvement in our U.S. CBD business, due primarily to the year-over-year decrease in restructuring charges, as we recorded charges of $7.3 million in the nine months ended December 31, 2022 relating to inventory write-downs resulting from strategic changes to our business. These charges decreased to $nil in the nine months ended December 31, 2023 and the realized benefit of our cost savings program and the strategic changes made to our business, including the shift to a contract manufacturing model for certain product formats and the re-focusing of our U.S. CBD product and

brand portfolio. Further supporting the improved gross margin was a shift in the business mix to increased sales in Australia, Poland and Czech Republic compared to the nine months ended December 31, 2022.

Gross margin for our Storz & Bickel segment was $21.1 million in the nine months ended December 31, 2023, or 43% of net revenue, as compared to $20.8 million in the nine months ended December 31, 2022, or 42% of net revenue. Gross margins were broadly consistent on a year-over-year basis.

Gross margin for our This Works segment was $10.5 million in the nine months ended December 31, 2023, or 50% of net revenue, as compared to $9.0 million in the nine months ended December 31, 2022, or 43% of net revenue. The year-over-year increase in the gross margin percentage is primarily due to lower excess and obsolete inventory charges in the nine months ended December 31, 2023.

The following table presents operating expenses for the nine months ended December 31, 2023 and 2022:

Selling, general and administrative expenses were $174.8 million in the nine months ended December 31, 2023, as compared to $271.4 million in the nine months ended December 31, 2022.

General and administrative expense was $65.9 million in the nine months ended December 31, 2023, as compared to $89.9 million in the nine months ended December 31, 2022. The year-over-year decrease is primarily attributable to the impact of the restructuring actions and cost savings programs initiated in the fourth quarters of both fiscal 2022 and fiscal 2023. We realized reductions relative to the nine months ended December 31, 2023 primarily in relation to: (i) compensation costs for finance, information technology, legal and other administrative functions; and (ii) a reduction in facilities and insurance costs. The decrease noted above was partially offset by a year-over-year decrease in the amount of payroll subsidies received from the Canadian government pursuant to a COVID-19 relief program, from $2.9 million received in the nine months ended December 31, 2022 to $nil in the nine months ended December 31, 2023.

Sales and marketing expense was $58.7 million in the nine months ended December 31, 2023, as compared to $106.1 million in the nine months ended December 31, 2022. The year-over-year decrease is primarily attributable to: (i) the divestiture of our retail business in Canada in the third quarter of fiscal 2023; (ii) cost reductions related to the previously-noted restructuring actions and cost savings programs, which resulted in a rationalization of our sales and marketing spending in certain areas of our business, particularly for our Canadian cannabis and U.S. CBD businesses, and a reduction in compensation costs.

Research and development expense was $3.8 million in the nine months ended December 31, 2023, as compared to $17.3 million in the nine months ended December 31, 2022. The year-over-year decrease is primarily attributable to cost reductions associated with the previously-noted restructuring actions and cost savings programs, as we: (i) continued to realize reductions in

compensation costs and curtail research and development projects; and (ii) shifted to outsourced contract model for certain research and development projects.

Acquisition, divestiture, and other costs were $24.4 million in the nine months ended December 31, 2023, as compared to $31.5 million in the nine months ended December 31, 2022. In the nine months ended December 31, 2023, costs were incurred primarily in relation to:

Comparatively, in the nine months ended December 31, 2022, costs were incurred primarily in relation to the Reorganization and the planned divestiture of certain of our corporate-owned retail stores, and evaluating other potential acquisition opportunities.

Depreciation and amortization expense was $22.1 million in the nine months ended December 31, 2023, as compared to $26.5 million in the nine months ended December 31, 2022. The year-over-year decrease is primarily attributable to: (i) the previously-noted restructuring actions and cost savings programs, including the closure of certain of our Canadian facilities and other operational changes to implement cultivation-related efficiencies and improvements in the Canadian adult-use cannabis business; and (ii) the divestiture of our retail business in Canada in the third quarter of fiscal 2023.

Share-based compensation expense was $10.1 million in the nine months ended December 31, 2023, as compared to $20.9 million in the nine months ended December 31, 2022. The year-over-year decrease is primarily attributable to the impact of our previously-noted restructuring actions, which resulted in forfeitures of stock options, restricted share units and performance units and results in lower relative expenses in future periods. While 2.4 million stock options were granted in the first quarter of fiscal 2024 and 1.5 million restricted share units were granted in the second quarter of fiscal 2024, the associated expense relating to both items partially offset the decrease noted. However, the impact was limited because the stock options and restricted share units were only issued part-way through the period.

Loss on asset impairment and restructuring recorded in operating expenses were $2.5 million in the nine months ended December 31, 2023, as compared to $1.8 billion in the nine months ended December 31, 2022.

Loss on asset impairment and restructuring recorded in the nine months ended December 31, 2023 were primarily related to the charges associated with the completion of the This Works Divestiture, as $28.1 million of write-downs occurred due to the sale. In addition, there were various incremental impairment losses and other costs associated with the restructuring of our Canadian cannabis operations that were initiated in the three months ended March 31, 2023. These charges were offset by a gain on the sale of our production facility at 1 Hershey Drive in Smiths Falls, Ontario. The gain is due to the sale proceeds exceeding the carrying value that was previously impaired at March 31, 2023.

Comparatively, in the nine months ended December 31, 2022, the loss on asset impairment and restructuring were primarily related to:

The following table presents other income (expense), net, and income tax expense for the nine months ended December 31, 2023 and 2022:

Other income (expense), net was an expense amount of $253.3 million in the nine months ended December 31, 2023, as compared to an expense amount of $396.1 million in the nine months ended December 31, 2022. The year-over-year change of $142.8 million is primarily attributable to:

These fair value decreases were partially offset by fair value increases primarily attributable to our investments in:

Comparatively, the expense amount in the nine months ended December 31, 2022 was primarily attributable to fair value decreases relating to our investments in: (i) the TerrAscend Exchangeable Shares ($207.0 million); (ii) the secured debentures issued by TerrAscend Canada and Arise Bioscience and associated Prior Warrants (totaling $58.7 million); (iii) the New Warrants issued by TerrAscend ($17.5 million) and (iv) the TerrAscend Option ($5.1 million), which were all driven largely by a decrease of approximately 78% in TerrAscend’s share price in the nine months ended December 31, 2022. Additionally, the fair value of our investment in the Wana and Jetty financial instruments decreased $135.4 million and $9.8 million, respectively, due primarily to changes in expectations of the future cash flows to be generated by Wana and an increase in discount rates used in the valuation of both the Wana and Jetty financial instruments. The fair value decreases were partially offset by a fair value increase related to the Acreage financial instrument in the amount of $37.0 million.

Income tax expense in the nine months ended December 31, 2023 was $13.8 million, compared to income tax expense of $10.6 million in the nine months ended December 31, 2022. In the nine months ended December 31, 2023, income tax expense consisted of

deferred income tax expense of $13.4 million (compared to an expense of $7.0 million in the nine months ended December 31, 2022) and current income tax expense of $0.4 million (compared to an expense of $3.6 million in the nine months ended December 31, 2022).

The increase of $6.4 million in the deferred income tax expense is primarily a result of (i) an increase due to the settlements of the Canopy Notes; and (ii) decrease in the change in deferred tax liabilities that arose in connection with the required revaluation of the accounting carrying value, but not the tax basis, of property, plant and equipment, intangible assets, and other financial assets.

The decrease of $3.2 million in current income tax expense arose primarily as a result of the reduction in the number of legal entities that generated income for tax purposes.

The net loss in the nine months ended December 31, 2023 was $389.0 million, as compared to a net loss of $2.5 billion in the nine months ended December 31, 2022. The year-over-year decrease in the net loss is primarily attributable to: (i) the year-over-year change from a loss on asset impairment and restructuring with respect to goodwill impairment losses of $1.7 billion recorded in the nine months ended December 31, 2022 to a gain on asset impairment and restructuring; (ii) the year-over-year change in other income (expense), net, of $142.8 million; and (iii) the decrease in selling, general and administrative expenses. These variances are described above.

Our “Adjusted EBITDA” is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management calculates Adjusted EBITDA as the reported net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; (gain)/loss on asset impairment and restructuring; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition, divestiture, and other costs. Asset impairments related to periodic changes to our supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. Accordingly, management believes that Adjusted EBITDA provides meaningful and useful financial information, as this measure demonstrates the operating performance of businesses.

The following table presents Adjusted EBITDA for the nine months ended December 31, 2023 and 2022:

The Adjusted EBITDA loss in the nine months ended December 31, 2023 was $43.8 million, as compared to an Adjusted EBITDA loss of $168.2 million in the nine months ended December 31, 2022. The year-over-year decrease in the Adjusted EBITDA loss is primarily attributable to the year-over-year increase in our gross margin, and the year-over-year decrease in our selling, general and administrative expenses.

The Interim Financial Statements have been prepared in accordance with generally accepted accounting principles on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

~~We manage liquidity risk by reviewing, on an ongoing basis, our sources of liquidity and capital requirements.~~ 66

As ~~of June 30, 2020, we had cash and cash equivalents of $975.9 million and short-term investments of $1.1 billion, which are predominantly invested~~reflected in ~~liquid securities issued by~~ the ~~United States and Canadian governments. Additionally,~~Interim Financial Statements, we have ~~capacity of $34.7 million under our $40.0 million revolving debt facility with Farm Credit Canada (“FCC”). In evaluating our capital requirements, including the impact, if any, on~~suffered recurring losses from operations and require additional financing to fund our business ~~from~~and operations. If we are unable to raise additional capital, it is possible that we will be unable to meet certain of our financial obligations.

These matters, when considered in the ~~COVID-19 pandemic, and~~aggregate, raise substantial doubt about our ability to ~~fund~~continue as a going concern for at least twelve months from the ~~execution~~issuance of the Interim Financial Statements.

In view of these matters, continuation as a going concern is dependent upon our ~~strategy, we believe we have adequate available liquidity to enable us~~continued operations, which in turn is dependent upon our ability to meet our ~~working~~financial requirements and to raise additional capital, and ~~other operating requirements, fund growth initiatives~~the success of our future operations. The Interim Financial Statements do not include any adjustments to the amount and ~~capital expenditures, settle our~~classification of assets and liabilities ~~and repay scheduled principal and interest payments on debt for at least the next twelve months.~~that may be necessary should we not continue as a going concern.

~~Our objective is to generate sufficient cash~~Management plans to fund our ~~operating requirements~~operations and ~~expansion plans. While we have incurred net losses on a U.S. GAAP basis~~debt obligations through existing cash positions. We are also currently evaluating several different strategies and ~~Adjusted EBITDA losses~~intend to ~~date and~~pursue actions that are expected to increase our cash and cash equivalents have decreased $327.3 million from March 31, 2020 (and, together with short-term investments, increased $60.3 million from March 31, 2020), as discussed in the “Cash Flows” section below, management anticipates the success and eventual profitability of the business. We have also ensured that we have access to public capital markets through our U.S. and Canadian public stock exchange listings. However, there can be no assurance that we will gain adequate market acceptance for our products or be able to generate sufficient positive cash flow to achieve our business plans. In the first quarter of fiscal 2021, our purchases of and deposits on property, plant and equipment totaled $61.5 million, which were funded out of available cash, cash equivalents and short-term investments. Included in our purchase obligations for fiscal 2021, as reflected under the heading “Contractual Obligations and Commitments” in the MD&A section of our Annual Report, are commitments for the purchase of property, plant and equipment totaling $73.2 million in fiscal 2021. We expect to continue funding these purchases with our available cash, cash equivalents and short-term investments. Therefore, we are subject to risksliquidity position, including, but not limited to, pursuing additional actions under our ~~inability~~cost-savings plan, seeking additional financing from both the public and private markets through the issuance of equity and/or debt securities, and monetizing additional assets.

Our management cannot provide assurances that we will be successful in accomplishing any of our proposed financing plans. Our management also cannot provide any assurance as to unforeseen circumstances that could occur within the next 12 months or, if after we raise capital, thereafter, which could increase our need to raise additional ~~funds~~capital on an immediate basis, which capital may not be available to us.

On September 18, 2023, we entered into subscription agreements (the “Subscription Agreements”) with certain institutional investors (the “Investors”). Pursuant to the terms of the Subscription Agreements, we issued 2.29 million units of the Company (the "Units") to the Investors at a price per Unit of US$10.90 for aggregate gross proceeds of $33.7 million (US$25.0 million) (the “Unit Offering”). Each Unit is comprised of one Canopy Growth common share and one common share purchase warrant (a “Warrant”). Each Warrant entitles the holder to acquire one Canopy Growth common share at a price per share equal to US$13.50 for a period of five years from the date of issuance. The Unit Offering closed on September 19, 2023. The Investors also held an over-allotment option to acquire up to an additional 2.29 million Units at a price per Unit of US$10.90 for aggregate gross proceeds of approximately US$25.0 million at the discretion of the Investors at any time on or before November 2, 2023 (the “Over-Allotment Option”). The Over-Allotment Option was not exercised by the Investors and expired on November 2, 2023.

On January 18, 2024, we entered into subscription agreements (the "January 2024 Subscription Agreements") with certain institutional investors (the "January 2024 Investors"). Pursuant to the terms of the January 2024 Subscription Agreements, we issued 8.16 million units of the Company (the "January 2024 Units") to the January 2024 Investors at a price per January 2024 Unit of US$4.29 for aggregate gross proceeds of approximately $47.1 million (US$35.0 million) (the "January 2024 Unit Offering"). Each January 2024 Unit is comprised of (a) one Canopy Growth common share and (b)(i) one Series A common share purchase warrant (a "Series A Warrant") or (ii) one Series B common share purchase warrant (a "Series B Warrant" and, together with the Series A Warrants, the "January 2024 Warrants"). Each January 2024 Warrant entitles the holder to acquire one Canopy Growth common share from the Company at a price per share equal to US$4.83. The Series A Warrants are currently exercisable and will remain exercisable until January 19, 2029, and the Series B Warrants will be exercisable for a period commencing on July 19, 2024 until July 19, 2029. The January 2024 Unit Offering closed on January 19, 2024.

In addition to the above, we continue to review and pursue selected external financing sources to ensure adequate financial resources. These potential sources include, but are not limited to: (i) obtaining financing from traditional or non-traditional investment capital organizations; (ii) obtaining funding from the sale of our common shares or other equity or debt instruments; and (iii) obtaining debt financing with lending terms that more closely match our business model and capital needs. We may from time to time seek to retire our outstanding debt through ~~debt~~cash purchases and/or exchanges for equity ~~financing to support~~securities, and open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our ~~continued development, including capital expenditure~~liquidity requirements, ~~operating requirements~~contractual restrictions and ~~to meet our liabilities and commitments as they come due.~~other factors. The amounts involved may be material.

The following table presents cash flows for the nine months ended December 31, 2023 and 2022:

Cash used in operating activities totaled $259.9 million in the ~~first quarter of fiscal 2021 totaled $118.5 million,~~nine months ended December 31, 2023, as compared to cash used of ~~$158.3~~$417.8 million in the ~~first quarter of fiscal 2020.~~nine months ended December 31, 2022. The ~~year-over-year~~ decrease in the cash used in operating activities ~~was~~is primarily due to: (i) the year-over-year decrease in our working capital spending, resulting from our previously-noted restructuring actions and cost savings programs, including the closure of certain of our Canadian facilities and other operational changes to implement cultivation-related efficiencies and improvements in the Canadian adult-use cannabis business; and (ii) a reduction in the cash interest paid resulting from a reduction in our debt balances.

The cash provided by investing activities totaled $202.1 million in the nine months ended December 31, 2023, as compared to cash provided of $342.1 million in the nine months ended December 31, 2022.

In the nine months ended December 31, 2023, purchases of property, plant and equipment were $3.2 million, primarily related to production equipment enhancements made at certain of our Canadian cultivation and production facilities, and at our Storz & Bickel facilities. Comparatively, in the nine months ended December 31, 2022, we invested $6.2 million in improvements at certain of our Canadian cultivation and production activities, and at our Storz & Bickel facilities.

In the nine months ended December 31, 2023, our strategic investments in other financial assets were $0.5 million and related primarily to the Indiva Investment, as described under "Recent Developments" above. Comparatively, in the nine months ended December 31, 2022, our strategic investments in other financial assets were $67.2 million and related primarily to: (i) the upfront payment made as consideration for entering the Jetty Agreements ($29.2 million); and (ii) the payment of the Option Premium in the amount of $38.0 million (US$28.5 million) in connection with Acreage Debt Optionholder's acquisition of an option to purchase the Acreage Debt from the Lenders, pursuant to the option agreement entered into with the Lenders in connection with the Reorganization.

Net redemptions of short-term investments in the nine months ended December 31, 2023 were $68.3 million, as compared to net redemptions of $415.3 million in the nine months ended December 31, 2022. The year-over-year decrease in the net ~~loss,~~redemptions reflects the continued redemption of our short-term investments, largely to fund operations and ~~a year-over-year reduction~~investing activities as described above. As at December 31, 2023, we had short-term investments remaining of $43.4 million.

Net cash flow on sale of subsidiaries in ~~our working capital spending on inventory primarily attributable~~the nine months ended December 31, 2023 was an outflow of $3.7 million and related to the ~~lower production output~~completion of the This Works Divestiture, refer to Note 27 of the financial statements for details. Comparatively, in the ~~first~~nine months ended December 31, 2022 an inflow of $12.4 million resulted from the sale of certain wholly-owned subsidiaries.

Additional cash inflows during the nine months ended December 31, 2023 include proceeds of $153.8 million from the sale of property, plant and equipment, primarily in relation to facilities that have been recently sold in connection with the restructuring actions associated with our Canadian cannabis operations and transition to an asset-light model.

Finally, other investing activities resulted in a cash outflow of $9.2 million in the nine months ended December 31, 2023, primarily related to completing the purchase of the remaining 45% of the common shares of Les Serres Vert Cannabis Inc., in connection with the restructuring actions related to our Canadian cannabis operations initiated in the fourth quarter of fiscal 2021, as described in the “Cost of Goods Sold and Gross Margin” section above. These factors were partially offset by an overall decrease in the non-cash income and expense items impacting the net loss.

The cash used in ~~investing~~financing activities ~~totaled $426.0 million~~ in the ~~first quarter of fiscal 2021,~~nine months ended December 31, 2023 was $473.5 million, as compared to cash used of ~~$405.6~~$145.9 million in the ~~first quarter of fiscal 2020.~~nine months ended December 31, 2022. In the first quarter of fiscal 2021, we invested $61.5 million in our indoor facility in Newfoundland, our gummy factory in Smiths Falls, and our production infrastructure in the United States. Comparatively, in the first quarter of fiscal 2020 we invested $211.8 million in expanding our Canadian and international growing capacity, and in the construction of advanced manufacturing capability and a bottling plant at our Smiths Falls location. The year-over-year decrease in our purchases of property, plant and equipment reflects the substantial completion of our cultivation and Cannabis 2.0 infrastructure build-out, and the shift in strategy to an asset-light model in certain markets.

In the first quarter of fiscal 2021 we did not complete any acquisitions, whereas in the first quarter of fiscal 2020 cash outflows related to acquisitions totaled $425.0, and included our acquisitions of C³ and This Works. We completed strategic investments totaling $2.6 million in the first quarter of fiscal 2021 in the form of equity instruments of certain entities, as compared to strategic investments totaling $427.4 million in the first quarter of fiscal 2020 which most notably included the $395.2 million investment in the Acreage financial instrument. Finally, in the first quarter of fiscal 2021nine months ended December 31, 2023, we made ~~payments totaling $4.5 million for acquisition-related liabilities, as compared to $21.4 million in the first quarter~~repayments of ~~fiscal 2020 as we continue to draw-down on the amounts owing in relation to acquisitions completed in prior years.~~

Additional cash inflows during the first quarter of fiscal 2021 related to proceeds of $18.3 million from the sale of a portfolio of patents in Germany, and $10.0 million related to a recovery of amounts related to construction financing.

~~Partially offsetting these decreases in cash outflows was the net purchase of short-term investments in the first quarter of fiscal 2021~~long-term debt in the amount of ~~$382.5 million, as compared~~$480.1 million. These repayments primarily related to the ~~net redemption~~second payment made pursuant to the Paydown, the July 2023 Paydown, the Second Quarter 2024 Paydowns, the Third Quarter 2024 Paydowns and settlement of ~~short-term investments~~Canopy Notes.

Other financing activities resulted in a cash outflow of ~~$687.8~~$27.2 million, which related to: (i) payments made in connection with terminating the ~~first quarter of fiscal 2020.~~ finance lease for the cultivation facility in Mirabel, Quebec and (ii) share issuance, debt issuance and debt extinguishment costs.

The ~~year-over-year change reflects our investment of the~~cash used in financing activities was partially offset by proceeds from ~~CBI exercising their warrants during~~ the ~~quarter (see below) in relatively safe, liquid investments. Comparatively, in the first quarter~~Unit Offering of ~~fiscal 2020 we redeemed short-term investments for use for the purposes described above.~~

The cash provided by financing activities totaled $247.3 million in the first quarter of fiscal 2021, as compared to cash used of $81.7 million in the first quarter of fiscal 2020. In the first quarter of fiscal 2021 we received proceeds of $245.0 million in relation to CBI exercising 18.9 million warrants to purchase our common shares. Additionally, in the first quarter of fiscal 2020 we repaid the Alberta Treasury Board financing in the amount of $95.2 million.

Free cash flow is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Management believes that free cash flow presents meaningful information regarding the amount of cash flow required to maintain and organically expand our business, and that the free cash flow measure provides meaningful information regarding our liquidity requirements.

The following table presents free cash flows for the three and nine months ended December 31, 2023, and 2022:

Free cash flow in the ~~first quarter of fiscal 2021~~three months ended December 31, 2023 was an outflow of ~~$180.1~~$33.9 million, as compared to an outflow of ~~$370.1~~$78.9 million in the ~~first quarter of fiscal 2020.~~three months ended December 31, 2022. The year-over-year decrease in the free cash outflow primarily reflects the decrease in ~~the~~ cash used ~~for~~in operating activities, as described ~~above, and~~above.

Free cash flow for the ~~substantial completion~~nine months ended December 31, 2023 was an outflow of ~~our cultivation and Cannabis 2.0 infrastructure build-out over the past year and the shift in strategy~~$209.2 million, as compared to an ~~asset-light model~~outflow of $305.0 million in ~~certain markets.~~the nine months ended December 31, 2022. The year-over-year decrease in the free cash outflow primarily reflects the decrease in cash used in operating activities, as described above.

Since our formation, we have financed our cash requirements primarily through the issuance of ~~capital stock,~~common shares of Canopy Growth, including the $5.1 billion investment by CBI in the third quarter of fiscal 2019, and debt. Total debt outstanding as of ~~June 30, 2020~~December 31, 2023 was ~~$500.4~~$612.1 million, ~~as compared to $465.4 million~~a decrease from $1.3 billion as of March 31, ~~2020.~~2023. The total principal amount owing, which excludes fair value adjustments related to ~~our convertible senior notes,~~the CBI Note, was ~~$614.5~~$626.6 million at ~~June 30, 2020, relatively consistent with~~December 31, 2023, a decrease from $1.3 billion at March 31, 2023, which excludes fair value adjustments related to the Canopy Notes. These decreases were due to: (i) the repayment of $125.6 million (US$93.8 million) of the principal amount ~~owing~~outstanding under the Credit Agreement as part of ~~$615.2~~the Paydown, as described under "Recent Developments" above; (ii) the conversion, into Canopy Growth common shares, of the remaining amount outstanding under the Convertible Debentures of $93.2 million; (iii) the June 2023 Exchange Transaction, which resulted in the

of aggregate principal amount of the Canopy Notes from the Noteholders, partially offset by the issuance of the CBI Note in connection with the CBI Transaction; (iv) the July 13, 2023 Redemption Agreements, pursuant to which $193 million aggregate principal amount was redeemed for a combination of cash, shares and the Debentures with an aggregate principal amount of approximately $40.4 million; (v) the maturity of the remaining Canopy Notes due in July 2023 where the remaining $31.9 million in aggregate principal was settled in cash; (vi) the Second Quarter 2024 Paydowns resulting in an aggregate principal reduction of $73.3 million; (vii) settlement of the $40.4 million of Debentures with Canopy Growth common shares; and (viii) the Third Quarter 2024 Paydowns resulting in an aggregate principal reduction of $65.4 million.

The Credit Agreement provides for the Credit Facility in the aggregate principal amount of US$750.0 million.

The Company had the ability to obtain up to an additional US$500.0 million of incremental senior ~~notes~~secured debt pursuant to the Credit Agreement. As described above under “Recent Developments”, pursuant to the balance sheet actions completed in connection with the Reorganization, on October 24, 2022, we entered into agreements with certain of our lenders under the Credit Agreement pursuant to which we agreed to purchase in the aggregate US$187.5 million of the principal amount outstanding under the Credit Facility at a discounted price of US$930 per US$1,000 or US$174.4 million in the aggregate. The first payment, which was oversubscribed, in the amount of approximately $117.5 million (US$87.9 million) was made on November 10, 2022 to reduce the principal indebtedness under the Credit Facility by approximately $126.3 million (US$94.4 million). The second payment of approximately $116.8 million (US$87.2 million) was made on April 17, 2023 to reduce principal indebtedness under the Credit Facility by approximately $125.6 million (US$93.8 million). Additionally, on October 24, 2022, we and certain of our lenders agreed to make certain amendments to the Credit Agreement which, among other things, resulted in: (i) a reduction to the minimum liquidity covenant to no less than US$100.0 million following completion of the second principal repurchase on April 17, 2023; (ii) certain changes to the application of net proceeds from asset sales; (iii) the establishment of a new committed delayed draw term credit facility in an aggregate principal amount of US$100.0 million; and (iv) the elimination of the additional US$500.0 million incremental term loan facility.

As described above under “Recent Developments”, on July 13, 2023, we entered into the Amended Credit Agreement. Pursuant to the Amended Credit Agreement we were required to make the July 2023 Paydown. In addition, pursuant to the Amended Credit Agreement we agreed to apply certain net proceeds from asset sales to prepay or repurchase principal indebtedness under the Credit Facility and receive principal reductions at, in certain circumstances, a discounted price of US$950 per US$1,000. The Amended Credit Agreement also includes, among other things, amendments to the minimum liquidity covenant such that the US$100,000 minimum ceased to apply concurrently with the July 2023 Paydown. The July 2023 Paydown was made on July 21, 2023.

As described above under “Recent Developments”, on each of August 11, 2023 and September 14, 2023, pursuant to the terms of the Amended Credit Agreement, we repurchased additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales. The Second Quarter 2024 Paydowns resulted in an aggregate principal reduction of $73.3 million (US$54.5 million) for a cash payment of $69.6 million (US$51.8 million).

As described above under “Recent Developments”, on each of November 28, 2023 and December 27, 2023, pursuant to the terms of the Amended Credit Agreement, we repurchased and repaid, as applicable, additional outstanding principal amounts under the Credit Facility using certain net proceeds from completed asset sales (the "Third Quarter 2024 Paydowns"). The Third Quarter 2024 Paydowns resulted in an aggregate principal reduction of $65.4 million (US$48.5 million) for a cash payment of $63.2 million (US$46.9 million).

The Credit Facility matures on March 18, 2026. Borrowings under the Credit Facility are available by either prime rate advances or SOFR advances. Prime rate advances bear interest at the applicable prime rate plus 7.50% per annum and are subject to a prime rate floor of 2.00%. SOFR advances bear interest at the adjusted term SOFR rate plus 8.50% per annum and are subject to an adjusted term SOFR rate floor of 1.00%. Our obligations under the Credit Facility are guaranteed by our material wholly-owned Canadian and U.S. subsidiaries. The Credit Facility is secured by substantially all of our assets and our material wholly-owned Canadian and U.S. subsidiaries, including material real property. The Credit Agreement contains representations and warranties, and affirmative and negative covenants.

In June 2018, we issued ~~convertible senior notes~~the Canopy Notes with an aggregate principal amount of $600.0 million. The ~~notes~~Canopy Notes bear interest at a rate of 4.25% per annum, payable semi-annually on January 15th and July 15th of each year commencing January 15, 2019. The

~~notes mature~~ Canopy Notes matured on July 15, 2023. ~~Holders~~In June 2022, in connection with the 2022 Exchange Transaction, we entered into the 2022 Exchange Agreements with the Noteholders and agreed to acquire and cancel approximately $262.6 million of aggregate

principal amount of the ~~notes may convert~~Canopy Notes from the ~~notes~~Noteholders for an aggregate purchase price (excluding $5.4 million paid in cash to the Noteholders for accrued and unpaid interest) of $260.0 million which was paid in our common shares.

The Canopy Notes were issued pursuant to an indenture dated June 20, 2018, as supplemented on April 30, 2019 and June 29, 2022 (collectively, the “Canopy Notes Indenture”). As a result of a supplement to the Canopy Notes Indenture dated June 29, 2022 (the “Second Supplemental Indenture”), we irrevocably surrendered our right to settle the conversion of any Note with our common shares. As a result, all conversions of Canopy Notes following the execution of the Supplemental Indenture will be settled entirely in cash.

On April 13, 2023, we entered into the April 2023 Exchange Agreement with Greenstar in order to acquire and cancel $100.0 million aggregate principal amount of our outstanding Canopy Notes. Pursuant to the April 2023 Exchange Agreement, we agreed to acquire and cancel $100.0 million aggregate principal amount of the Canopy Notes held by Greenstar in exchange for: (i) a cash payment to Greenstar in the amount of the unpaid and accrued interest owing under the Canopy Notes held by Greenstar; and (ii) the CBI Note. As a result, Greenstar no longer holds any Canopy Notes.

On June 29, 2023, we entered into the June 2023 Exchange Agreements with certain Noteholders to acquire and cancel $12.5 million aggregate principal amount of the Canopy Notes from such Noteholders in exchange for cash, including accrued and unpaid interest owing under the Canopy Notes, and the issuance of approximately 2.43 million Canopy Growth common shares.

On July 13, 2023, we entered into the Redemption Agreements with certain Noteholders of our Canopy Notes, pursuant to which approximately $193 million aggregate principal amount of the Canopy Notes were redeemed on the applicable closing date for: (i) an aggregate cash payment of approximately $101 million; (ii) the issuance of approximately 9.04 million Canopy Growth common shares; and (iii) the issuance of approximately $40.4 million aggregate principal amount of Debentures. The Debentures were issued pursuant to a debenture indenture dated July 14, 2023 between us and Odyssey Trust Company, as trustee. The Debentures are convertible into Debenture Shares at ~~their~~the option of the holder at any time ~~from~~or times following the Shareholder Approval until the maturity date of January 15, 2024, at a conversion price equal to $5.50, subject to adjustment in certain events. Following the Redemption, we settled the remaining aggregate principal amount owing under the outstanding Canopy Notes and, as of the maturity date, there were no Canopy Notes outstanding.

As of September 30, 2023, all conversions pursuant to the Debentures have been completed and the amount outstanding under the Debentures was $nil.

On October 19, 2018, Supreme Cannabis issued 6.0% senior unsecured convertible debentures (the “Supreme Debentures”) for gross proceeds of $100.0 million. On September 9, 2020, the Supreme Debentures were amended to effect, among other things: (i) the cancellation of $63.5 million of principal amount of the Supreme Debentures; (ii) an increase in the interest rate to 8% per annum; (iii) the extension of the maturity date to September 10, 2025; and (iv) a reduction in the conversion price to $2.85.

In addition, on September 9, 2020, Supreme Cannabis issued new senior unsecured non-convertible debentures (the “Accretion Debentures”). The principal amount began at $nil and accretes at a rate of 11.06% per annum based on the remaining principal amount of the Supreme Debentures of $36.5 million to a maximum of $13.5 million, compounding on a semi-annual basis commencing on September 9, 2020, and ending on September 9, 2023. As of September 9, 2023, the principal amount of the Accretion Debentures was finalized as $10.4 million. The Accretion Debentures are payable in cash, but do not bear cash interest and are not convertible into Supreme Shares. The principal amount of the Accretion Debentures will amortize, or be paid, at 1.0% per month over the 24 months prior to maturity.

As a result of the arrangement (the “Supreme Arrangement”) we completed with Supreme Cannabis on June 22, 2021 pursuant to which we acquired 100% of the issued and outstanding common shares of Supreme Cannabis (the “Supreme Shares”), the Supreme Debentures remain outstanding as securities of Supreme Cannabis, which, upon conversion will entitle the holder thereof to receive, in lieu of the number of Supreme Shares to which such holder was theretofore entitled, the consideration payable under the Supreme Arrangement that such holder would have been entitled to be issued and receive if, immediately prior to the effective time of the Supreme Arrangement, such holder had been the registered holder of the number of Supreme Shares to which such holder was theretofore entitled.

In connection with the Supreme Arrangement, we, Supreme Cannabis and Computershare Trust Company of Canada (the “Trustee”) entered into a supplemental indenture whereby we agreed to issue common shares upon conversion of any Supreme Debenture. In addition, we may force conversion of the Supreme Debentures outstanding with 30 days’ notice if the daily volume weighted average trading price of our common shares is greater than $385.90 for any 10 consecutive trading days. We, Supreme

Cannabis and the Trustee entered into a further supplemental indenture whereby we agreed to guarantee the obligations of Supreme Cannabis pursuant to the Supreme Debentures and the Accretion Debentures. During the three and nine months ended December 31, 2023 principal payments on Accretion Debentures totaled $1,500 and $2,000, respectively.

On February 21, 2023, we entered into the Convertible Debenture Agreement with an Institutional Investor pursuant to which the Institutional Investor purchased $135.2 million (US$100.0 million) aggregate principal amount of Convertible Debentures in a registered direct offering. The Convertible Debentures were convertible into our common shares at the option of the Institutional Investor at any time or times prior to the maturity ~~date. CBI holds $200.0~~date of February 28, 2028, at a conversion price equal to 92.5% of the volume-weighted average price of our common shares during the three consecutive trading days ending on the business day immediately prior to the date of conversion. No cash payment or any other property of Canopy Growth was made by us to the Institutional Investor in connection with, or as a result of, the issuance, conversion or repayment of the Convertible Debentures.

In the first quarter of fiscal 2024, $93.2 million in aggregate principal amount of ~~these notes.~~

~~On August 13, 2019, we entered into a $40.0~~the Convertible Debentures was converted for approximately 8.45 million revolving debt facility with FCC. The new facility replaces all previous loans with FCC and is secured by our property on Niagara-on-the-Lake, Ontario. The outstanding balance at June 30, 2020 is $5.3 million, and the facility bears interest of 3.45%, or the FCC prime rate plus 1.0%, and matures on September 3, 2024.

~~The revolving debt facility agreement with FCC includes affirmative, negative and financial covenants.~~Canopy Growth common shares. As of June 30, ~~2020, we are in compliance with~~2023, all ~~covenants in~~conversions pursuant to the ~~revolving debt facility agreement.~~Convertible Debentures were completed and the amount outstanding under the Convertible Debentures was $nil.

~~Further information regarding our debt issuances, including the conversion rights of the senior convertible notes, is included in Note 15 of the Interim Financial Statements.~~

~~There~~Other than changes to our Canopy Notes pursuant to the June 2023 Exchange Transactions, the July 13, 2023 Redemption Agreements, the Second Quarter 2024 Paydowns, the Third Quarter 2024 Paydowns, and certain agreements entered into in connection with the Reorganization and the Reorganization Amendments, as described above under “Recent Developments”, there have been no material changes to our contractual obligations and commitments from the information provided in the MD&A section in our Annual Report.

We have no off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

There have been no material changes to our critical accounting policies and estimates from the information provided in the MD&A section in our Annual Report.

We do not believe that an event occurred or circumstances changed during the third quarter of fiscal 2024 that would, more likely than not, reduce the fair value of the Storz & Bickel reporting unit below its carrying value. Therefore, we concluded that the quantitative goodwill impairment assessment was not required for the Storz & Bickel reporting unit at December 31, 2023. The carrying value of goodwill associated with the Storz & Bickel reporting unit was $85,237 at December 31, 2023.

We are required to perform our next annual goodwill impairment analysis on March 31, 2024, or earlier should there be an event that occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Market risk is the potential economic loss arising from adverse changes in market factors. As a result of our global operating, acquisition and financing activities, we are exposed to market risk associated with changes in foreign currency exchange rates, interest

rates and equity prices. To manage the volatility relating to these risks, we may periodically purchase derivative instruments including foreign currency forwards. We do not enter into derivative instruments for trading or speculative purposes.

Our Interim Financial Statements are presented in Canadian dollars. We are exposed to foreign currency exchange rate risk as the functional currencies of certain subsidiaries, including those in the United States and Europe, are not in Canadian dollars. The translation of foreign currencies to Canadian dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date, and for revenues and expense using an average exchange rate for the period. Therefore, fluctuations in the value of the Canadian dollar affect the reported amounts of net revenue, expenses, assets and liabilities. The resulting translation adjustments are reported as a component of accumulated other comprehensive income or loss on the consolidated balance sheet.

A hypothetical 10% change in the U.S. dollar against the Canadian dollar compared to the exchange rate at ~~June 30, 2020,~~December 31, 2023, would affect the carrying value of net assets by approximately ~~$111.1~~$66.6 million, with a corresponding impact to the foreign currency translation account within accumulated other comprehensive income ~~or loss.~~(loss). A hypothetical 10% change in the euro against the Canadian dollar compared to the exchange rate at ~~June 30, 2020,~~December 31, 2023, would affect the carrying value of net assets by approximately ~~$17.3~~$24.0 million, with a corresponding impact to the foreign currency translation account within accumulated other comprehensive income ~~or loss.~~(loss).

We also have exposure to changes in foreign exchange rates associated with transactions which are undertaken by our subsidiaries in currencies other than their functional currency. As a result, we have been impacted by changes in exchange rates and may be impacted for the foreseeable future.

Foreign currency derivative instruments may be used to hedge existing foreign currency denominated assets and liabilities, forecasted foreign currency denominated sales/purchases to/from third parties as well as intercompany sales/purchases, intercompany principal and interest payments, and in connection with acquisitions, divestitures or investments outside of Canada. Historically, while we have purchased derivative instruments to mitigate the foreign exchange risks associated with certain transactions, the impact of these hedging transactions on our ~~Financial Statements and Interim Financial Statements~~financial statements has been immaterial.

Our cash equivalents and short-term investments are held in both fixed-rate and adjustable-rate securities. Investments in fixed-rate instruments carry a degree of interest rate risk. The fair value of fixed-rate securities may be adversely impacted due to a rise in interest rates. Additionally, a falling-rate environment creates reinvestment risk because as securities mature, the proceeds are reinvested at a lower rate, generating less interest income. As at ~~June 30, 2020,~~December 31, 2023, our cash and cash equivalents, and short-term investments consisted of ~~$1.5 billion, as compared to $1.3 billion at March 31, 2020,~~$99 million in interest rate sensitive ~~instruments.~~instruments (March 31, 2023 – $0.3 billion).

Our financial liabilities consist of long-term fixed rate debt and floating-rate debt. Fluctuations in interest rates could impact our cash flows, primarily with respect to the interest payable on floating-rate debt.

We hold other financial assets and liabilities in the form of investments in shares, warrants, options, put liabilities, and convertible debentures that are measured at fair value and recorded through either net income (loss) or other comprehensive income (loss). We are exposed to price risk on these financial assets, which is the risk of variability in fair value due to movements in equity or market prices.

~~For our convertible senior notes, a primary driver of its fair value is our share price. An increase in our share price typically results in a fair value increase of the liability.~~

Information regarding the fair value of financial instrument assets and liabilities that are measured at fair value on a recurring basis, and the relationship between the unobservable inputs used in the valuation of these financial assets and their fair value is presented in Note 2223 of the Interim Financial Statements.

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this ~~quarterly report on Form 10-Q~~Quarterly Report was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~June 30, 2020,~~December 31, 2023, our disclosure controls and procedures ~~(a) are~~were not effective as of such date due to the material weakness in our internal control over financial reporting related to information technology ("IT") general controls that were disclosed in Item 9A of the Annual Report.

As previously disclosed in Item 9A of the Annual Report, we previously identified material weaknesses in our internal control over financial reporting relating to:

Status of Remediation of Material Weaknesses in Internal Control over Financial Reporting

Management has developed a remediation plan to address the previously disclosed material weaknesses for which we implemented process and control improvements.

Management continues to make progress in the remediation of all IT general control individual deficiencies that corresponded to the material weakness. The completed remediation actions include:

Effective September 14, 2023, Canopy Growth no longer has a controlling interest in BioSteel Sports Nutrition Inc. ("BioSteel Canada"), and effective November 16, 2023, Canopy Growth no longer has a controlling interest in BioSteel Manufacturing, LLC ("BioSteel Manufacturing") and BioSteel Sports Nutrition USA LLC. Further, during November 2023, Canopy Growth completed the sale of substantially all of the assets of BioSteel Canada and BioSteel Manufacturing. As a result, the BioSteel segment is no longer considered part of management’s internal control over financial reporting and the material weakness previously identified in our internal controls is no longer applicable to Canopy Growth.

To remediate the existing material weakness on IT general controls, additional time is required to demonstrate the effectiveness of the remediation efforts. The material weakness cannot be ~~disclosed by us in reports filed or submitted under~~considered remediated until the ~~Exchange Act is timely recorded, processed, summarized~~applicable remedial controls operate for a sufficient period of time and ~~reported and (b) include, without limitation,~~management has concluded, through testing, that these controls ~~and procedures designed to ensure~~are operating effectively. We may also conclude that ~~information~~additional measures may be required to ~~be disclosed~~remediate the material weakness in our internal control over financial reporting, which may necessitate further action. Remediation actions are subject to ongoing senior management review as well as oversight by ~~us in reports filed or submitted under~~ the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.Audit Committee of the Board.

~~There have been~~We are taking actions to remediate the material weakness relating to our internal control over financial reporting as described above. Except as discussed above, there were no changes in our “internal control over financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this ~~quarterly report on Form 10-Q~~Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than as disclosed below, we are not aware of: (a) any legal proceedings to which we are a party, or to which any of our properties is subject, which would be material to us or of any such proceedings being contemplated, (b) any penalties or sanctions imposed by a court relating to securities legislation, or other penalties or sanctions imposed by a court or regulatory body against us that would likely be considered important to a reasonable investor making an investment decision, and (c) any settlement agreements that we have entered into before a court relating to securities legislation or with a securities regulatory authority.

On ~~July 22, 2020,~~May 23, 2023, an ostensible shareholder commenced a putative class action (Turpel v. Canopy Growth Corporation, et al., Case No. 1:23-cv-043022-PAE) against the Company and two of its officers in the U.S. District Court for the Southern District of New York on behalf of persons and entities that purchased or otherwise acquired the Company’s securities between May 31, 2022 and May 10, 2023, alleging violations of U.S. federal securities laws. Two similar cases were subsequently filed, captioned as Kantner v. Canopy Growth Corporation, et al., Case No. 1:23-cv-06266-PAE and Allen v. Canopy Growth Corporation, et al., Case No. 1:23-cv-05891-PAE. On November 30, 2023, the U.S. District Court for the Southern District of New York consolidated the Turpel, Kantner and Allen actions (captioned as “In re Canopy Growth Securities Litigation, No. 23-cv-04302”) and appointed Chen Li as lead plaintiff. On January 22, 2024, the lead plaintiff filed a first amended complaint against the Company and certain of its current and former officers, alleging claims on behalf of persons and entities that purchased or otherwise acquired the Company’s securities between November 5, 2021 and June 22, 2023. The first amended complaint alleges that the Company made false or misleading statements and omissions regarding BioSteel’s revenue, performance and operations, and the Company’s internal controls over accounting and financial reporting in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The lead plaintiff seeks an unspecified amount of damages, attorneys’ fees and costs, and other relief. The Company anticipates filing a motion to dismiss the first amended complaint on or before March 7, 2024.

On January 18, 2024, a follow-on derivative shareholder lawsuit, captioned Press v. Schmeling et al., was ~~served with~~filed in the Supreme Court of the State of New York by ostensible shareholder Denise Press on behalf of Canopy Growth Corporation against the Company’s directors and certain of its officers based on substantially the same allegations as those alleged in the In re Canopy Growth Securities Litigation described above. The complaint asserts claims for breach of fiduciary duties, gross mismanagement, waste of corporate assets, unjust enrichment, and insider trading, and seeks damages, attorneys’ fees and costs, and equitable relief.

On June 27, 2023, an ostensible shareholder commenced a ~~statement~~putative class action (Dziedziejko v. Canopy Growth Corporation et al., Court File No. CV-23-00701769-00CP) in the Ontario Superior Court of ~~claim~~Justice against the Company, two of its officers, and the Company’s auditor on behalf of a putative class of all persons or entities who acquired Canopy’s securities in ~~which it was named, together with several other Canadian licensed cannabis producers, as a defendant~~the secondary market between June 1, 2021 to June 22, 2023 and held some or all of those securities until the close of trading on May 10, 2023 or June 22, 2023.

The plaintiff alleges that the Company’s disclosures contained misrepresentations within the meaning of the Securities Act (Ontario), that certain officers authorized, permitted, or acquiesced in the release of the impugned disclosures, that the Company and one of its officers acted in a manner that was oppressive or unfairly prejudicial to the proposed class members by failing to remedy alleged deficiencies in the Company’s internal controls, and that all of the defendants are liable for damages to the putative class. The action ~~proceeding filed~~seeks an unspecified amount of damages, interest, legal fees, and the costs of administering a plan of distribution of the recovery. The Company was also named in ~~Calgary, Alberta, Canada. The plaintiffs allege~~two other putative class proceedings that were commenced between May 2023 and July 2023 in the Ontario Superior Court of Justice regarding that the ~~defendants, including~~Company’s disclosures contained misrepresentations. However, on November 10, 2023, the Ontario Superior Court of Justice decided a carriage motion staying those actions (Leonard v. Canopy Growth Corporation et al., Court File No. CV-23-00702281-00CP and Twidale v. Canopy Growth Corporation et al., Court File No. CV-23-00700135-00CP), and allowing Dziedziejko v. Canopy Growth Corporation et al., Court File No. CV-23-00701769-00CP to proceed to a class certification hearing.

On June 15, 2023, an ostensible shareholder commenced a putative class action (Asmaro v. Canopy Growth Corporation et al., Court File No. VLC-S-S-234351) against the Company ~~marketed~~ and ~~sold medicinal~~two of its officers in the Supreme Court of British Columbia on behalf of a putative class of all persons and ~~recreational cannabis products with an advertised content~~entities who purchased or otherwise acquired securities of ~~THC~~the Company between August 6, 2021 and ~~CBD~~May 10, 2023. The lawsuit alleges that ~~was inaccurate~~the Company’s disclosures contained misrepresentations within the meaning of the Securities Act (British Columbia), that certain officers authorized, permitted, or acquiesced in the release of the impugned disclosures, and that all of the defendants are liable for damages to the putative class. The plaintiff seeks an unspecified amount of damages.

In May 2023, in connection with the Company’s internal review of the financial reporting matters related to BioSteel, as previously disclosed in the Annual Report (the “BioSteel Review”), the Company voluntarily self-reported to the SEC that the timing and amount of revenue recognition in the BioSteel segment were under review. As a result of self-reporting the BioSteel Review, the

Company is the subject of an ongoing investigation by the SEC. Although the Company is fully cooperating with the SEC and continues to voluntarily respond to requests in connection with this matter, it cannot predict when such matters will be completed or the outcome and potential impact. Any remedial measures, sanctions, fines or penalties, including, but not limited to, financial penalties and awards, injunctive relief and compliance conditions, imposed on the Company in connection with this matter could have a material adverse impact on our business, financial condition and results of operations. See “Risk Factors—Risks Relating to the Restatement of the Prior Financial Statements—As a result of self-reporting the BioSteel Review, the Company is the subject of an investigation by the SEC and an ongoing informal inquiry by regulatory authorities in Canada, and it cannot predict the timing of developments, and any adverse outcome of these continuing matters could have a material adverse effect on the Company” under Item 1A of the Annual Report.

On December 29, 2023, a Request for Arbitration was made identifying the Company, one of its subsidiaries, and another entity as respondents. The Claimant seeks damages in the amount of USD $32,666,667 against the ~~difference between~~respondents based on alleged breaches of a Share Purchase Agreement (“SPA”), including breaches of the ~~actual amount~~duty of ~~THC and/or CBD~~good faith and honest performance in relation to certain milestone payments in the ~~medicinal and recreational cannabis products and the amounts of THC and/or CBD listed on the label was outside the permissible variability limits. The proposed class has not yet been certified.~~ SPA.

The Company ~~is currently evaluating the merits~~denies any alleged misconduct and liability for each of the ~~claim~~claims asserted in the above-noted Court and ~~has~~Arbitral Proceedings, believes that the defendants/respondents have meritorious defenses to the claims, and expects to vigorously defend the claims, although the Company cannot predict when or how they will be resolved or estimate what the potential loss or range of loss would be, if any.

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not ~~yet retained defense counsel.~~currently a party to any other legal proceedings other than described above, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition, results of operations or prospects. Please refer to “Risk Factors” under Item 1A of the Annual Report for further discussion.

For information regarding factors that could affect our results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A in ~~our~~the Annual Report. ~~There~~Except as set forth below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A in our Annual Report.

There can be no certainty that all conditions to the Floating Share Arrangement and the Acreage Amending Agreement will be satisfied or waived, including, in the case of the Floating Share Arrangement, obtaining approval of the Amendment Proposal by the Exercise Outside Date, which may result in the acquisition of Acreage not being completed.

There can be no certainty, nor can the Company provide any assurance, that all conditions precedent contained in the Floating Share Arrangement Agreement and the Acreage Amending Agreement will be satisfied or waived, including that the current Exercise Outside Date of March 31, 2024 is extended or in the event of a default pursuant to the Acreage Debt. In addition, the Floating Share Arrangement is subject to certain conditions precedent which, among other things, includes the receipt of approval from the Company’s shareholders on the Amendment Proposal by the Exercise Outside Date. There can be no certainty, nor can the Company provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. If such conditions precedent are not satisfied, it may result in the acquisition of Acreage not being completed.

Acreage’s financial statements express doubt about its ability to continue as a going concern.

Acreage’s publicly available financial statements as of and for three and nine months ended September 30, 2023 filed with the SEC on November 14, 2023 (“Acreage’s September 30, 2023 Interim Financial Statements”) express doubt about Acreage’s ability to continue as a going concern. In particular, Acreage’s September 30, 2023 Interim Financial Statements state: “[Acreage] had an accumulated deficit as of September 30, 2023, as well as a net loss and negative cash flow from operating activities for the nine months ended September 30, 2023. Additionally, subsequent to quarter end [Acreage] was temporarily in default of the [Hempco Debenture, pursuant to which a subsidiary of Acreage owed approximately $46.8 million to a subsidiary of Canopy Growth as of September 30, 2023][. . .] These factors raise substantial doubt about [Acreage]’s ability to continue as a going concern for at least one year from the issuance of these financial statements.” In the event that Acreage is unable to continue as a going concern, the Acreage Amended Arrangement and the Floating Share Arrangement may not be completed. In the event that the Acreage Amended Arrangement and the Floating Share Arrangement are completed and Acreage is unable to continue as a going concern, this would have a negative impact on Canopy USA’s business, financial results and operations and have an adverse impact on the Company’s United States strategy, and, ultimately, the Company’s financial results and operations.

In view of the foregoing, Acreage’s continuation as a going concern is dependent upon its continued operations, which in turn is dependent upon, among other things, Acreage’s ability to meet its financial requirements. There is no assurance that Acreage will be successful in its plans to fund its operations and debt obligations as they become due and payable. Accordingly, in the event Acreage cannot satisfy its debt obligations as they become due, we may lose the Option Premium. In addition, Acreage may be required to terminate or significantly curtail its operations or enter into arrangements with third parties that may require Acreage to relinquish rights to certain aspects of its business and/or dispose of certain assets, which may ultimately result in Acreage not being able to satisfy the conditions in the Amended Acreage Arrangement and the Floating Share Arrangement and the acquisition of Acreage not being completed.

On February 6, 2024, Robert Hanson provided notice to the Company of his decision to resign from the Board of the Company, effective the same date. Mr. Hanson served as a member of the Corporate Governance, Compensation and Nominating Committee of the Board. Mr. Hanson’s resignation from the Board was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On February 7, 2024, on the recommendation of the Corporate Governance, Compensation and Nominating Committee the Board voted to increase the size of the Board to eight members and appoint each of Mr. Luc Mongeau and Mr. Willy Kruh to the Board effective immediately. Each of Mr. Mongeau and Mr. Kruh shall serve as a director of the Company until the next annual general meeting of shareholders or until his earlier death, resignation, or removal. Mr. Kruh will serve as a member of the Audit Committee and Mr. Mongeau will serve as a member of the Corporate Governance, Compensation and Nominating Committee.

The Board has determined that each of Mr. Mongeau and Mr. Kruh is independent under applicable Nasdaq listing rules. There is no arrangement or understanding between either of Mr. Mongeau and Mr. Kruh and any other person pursuant to which he was appointed as a director of the Company. There are no family relationships between each of Mr. Mongeau and Mr. Kruh and any director or executive officer of the Company or its subsidiaries. Neither Mr. Mongeau nor Mr. Kruh have a direct or indirect material interest in any transaction that would require disclosure under Item 404(a) of Regulation S-K.

In accordance with the Company’s customary practice, the Company has entered into its standard form of indemnification agreement with each of Mr. Mongeau and Mr. Kruh, which requires the Company to indemnify each director against certain liabilities that may arise as result of his status or service as a director. The Company’s Form of Director and Officer Indemnity Agreement is filed as Exhibit 10.1 to its Form 10-K for the fiscal year ended March 31, 2022, which was filed with the SEC on May 31, 2022.

In connection with the appointments to the Board, each of Mr. Mongeau and Mr. Kruh will be compensated in accordance with the Company’s director compensation program as described in the Company’s filings with the SEC.

During the three months ended December 31, 2023, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408(c) of Regulation S-K.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on


Canada	N/A
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1 Hershey Drive ~~Smith~~Smiths Falls, Ontario	K7A 0A8
(Address of principal executive offices)	(Zip Code)


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Interim Consolidated Balance Sheets	1
	Condensed Interim Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Interim Consolidated Statements of Shareholders’ Equity	3
	Condensed Interim Consolidated Statements of Cash Flows	57
	Notes to the Condensed Interim Consolidated Financial Statements	69
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2638
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4273
Item 4.	Controls and Procedures	4375
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	4377
Item 1A.	Risk Factors	4378
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4379
Item 3.	Defaults Upon Senior Securities	4479
Item 4.	Mine Safety Disclosures	4479
Item 5.	Other Information	4479
Item 6.	Exhibits	4480
Signatures		4581


	Three months ended December 31,						Nine months ended December 31,
	2023			2022			2023			2022
				(As Restated)						(As Restated)
Revenue	$	90,061		$	96,986		$	260,781		$	302,397
Excise taxes		11,556			12,136			36,423			37,379
Net revenue		78,505			84,850			224,358			265,018
Cost of goods sold		50,279			79,622			158,944			264,226
Gross margin		28,226			5,228			65,414			792
Operating expenses
Selling, general and administrative expenses		54,436			89,604			174,810			271,425
Share-based compensation		3,693			6,055			10,127			20,893
Loss on asset impairment and restructuring		30,413			22,259			2,452			1,794,212
Total operating expenses		88,542			117,918			187,389			2,086,530
Operating loss from continuing operations		(60,316	)		(112,690	)		(121,975	)		(2,085,738	)
Other income (expense), net		(171,037	)		(115,490	)		(253,270	)		(396,074	)
Loss from continuing operations before income taxes		(231,353	)		(228,180	)		(375,245	)		(2,481,812	)
Income tax recovery (expense)		1,077			1,336			(13,762	)		(10,633	)
Net loss from continuing operations		(230,276	)		(226,844	)		(389,007	)		(2,492,445	)
Discontinued operations, net of income tax		13,479			(37,532	)		(194,451	)		(169,492	)
Net loss		(216,797	)		(264,376	)		(583,458	)		(2,661,937	)
Net loss from continuing operations attributable to noncontrolling interests and redeemable noncontrolling interest		-			(542	)		-			(1,336	)
Discontinued operations attributable to noncontrolling interests and redeemable noncontrolling interest		-			(4,369	)		(18,526	)		(22,523	)
Net loss attributable to Canopy Growth Corporation	$	(216,797	)	$	(259,465	)	$	(564,932	)	$	(2,638,078	)

Basic and diluted loss per share1
Continuing operations	$	(2.78	)	$	(4.66	)	$	(5.56	)	$	(54.96	)
Discontinued operations		0.16			(0.68	)		(2.52	)		(3.24	)
Basic and diluted loss per share	$	(2.62	)	$	(5.34	)	$	(8.08	)	$	(58.20	)
Basic and diluted weighted average common shares outstanding1		82,919,190			48,611,260			69,918,744			45,323,788

Comprehensive income (loss):
Net loss from continuing operations	$	(230,276	)	$	(226,844	)	$	(389,007	)	$	(2,492,445	)
Other comprehensive income (loss), net of income tax
Fair value changes of own credit risk of financial liabilities		(1,354	)		4,538			(13,824	)		32,847
Foreign currency translation		10,104			14,921			575			24,694
Total other comprehensive income (loss), net of income tax		8,750			19,459			(13,249	)		57,541
Comprehensive loss from continuing operations		(221,526	)		(207,385	)		(402,256	)		(2,434,904	)
Comprehensive income (loss) from discontinued operations		13,479			(37,532	)		(194,451	)		(169,492	)
Comprehensive loss		(208,047	)		(244,917	)		(596,707	)		(2,604,396	)
Comprehensive loss from continuing operations attributable to noncontrolling interests and redeemable noncontrolling interest		-			(542	)		-			(1,336	)
Comprehensive loss from discontinued operations attributable to noncontrolling interests and redeemable noncontrolling interest		-			(4,369	)		(18,526	)		(22,523	)
Comprehensive loss attributable to Canopy Growth Corporation	$	(208,047	)	$	(240,006	)	$	(578,181	)	$	(2,580,537	)


	Three months ended December 31, 2022
			Additional paid-in capital											Accumulated
	Common shares		Share-based reserve			Warrants		Ownership changes			Redeemable noncontrolling interest			other comprehensive income (loss)			Deficit			Noncontrolling interests			Total
Balance at September 30, 2022 (As Restated)	$	7,818,089	$	501,455		$	2,581,788	$	(505,000	)	$	(40,140	)	$	(33,707	)	$	(8,773,216	)	$	2,956		$	1,552,225
Other issuances of common shares and warrants		22,009		(1,379	)		-		-			-			-			-			-			20,630
Share-based compensation		-		6,054			-		-			-			-			-			-			6,054
Issuance and vesting of restricted share units and performance share units		706		(706	)		-		-			-			-			-			-			-
Changes in redeemable noncontrolling interest		-		-			-		-			22,439			-			-			4,911			27,350
Ownership changes relating to noncontrolling interests, net		-		-			-		-			-			-			-			1,392			1,392
Redemption of redeemable noncontrolling interest		26,506		-			-		(2,696	)		(27,350	)		-			-			(1,552	)		(5,092	)
Comprehensive loss		-		-			-		-			-			19,459			(259,465	)		(4,911	)		(244,917	)
Balance at December 31, 2022 (As Restated)	$	7,867,310	$	505,424		$	2,581,788	$	(507,696	)	$	(45,051	)	$	(14,248	)	$	(9,032,681	)	$	2,796		$	1,357,642


	Nine months ended December 31, 2022
			Additional paid-in capital											Accumulated
	Common shares		Share-based reserve			Warrants		Ownership changes			Redeemable noncontrolling interest			other comprehensive income (loss)			Deficit			Noncontrolling interests			Total
Balance at March 31, 2022 (As Restated)	$	7,482,809	$	492,041		$	2,581,788	$	(509,723	)	$	(42,860	)	$	(42,282	)	$	(6,378,199	)	$	4,341		$	3,587,915
Cumulative effect from adoption of ASU 2020-06		-		4,452			-		-			-			-			(729	)		-			3,723
Other issuances of common shares and warrants		82,231		(1,732	)		-		-			-			-			-			-			80,499
Exercise of Previous Equity Incentive Plan stock options		1,506		(1,236	)		-		-			-			-			-			-			270
Share-based compensation		-		20,892			-		-			-			-			-			-			20,892
Issuance and vesting of restricted share units		8,993		(8,993	)		-		-			-			-			-			-			-
Changes in redeemable noncontrolling interest		-		-			-		4,723			25,159			-			-			22,015			51,897
Ownership changes relating to noncontrolling interests, net		-		-			-		-			-			-			-			1,851			1,851
Redemption of redeemable noncontrolling interest		26,506		-			-		(2,696	)		(27,350	)		-			(15,675	)		(1,552	)		(20,767	)
Settlement of unsecured senior notes		265,265		-			-		-			-			(29,507	)		-			-			235,758
Comprehensive income (loss)		-		-			-		-			-			57,541			(2,638,078	)		(23,859	)		(2,604,396	)
Balance at December 31, 2022 (As Restated)	$	7,867,310	$	505,424		$	2,581,788	$	(507,696	)	$	(45,051	)	$	(14,248	)	$	(9,032,681	)	$	2,796		$	1,357,642


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Three months ended June 30,
	2020			2019
Revenue	$	119,088		$	103,391
Excise taxes		8,672			12,909
Net revenue		110,416			90,482
Cost of goods sold		103,921			72,192
Gross margin		6,495			18,290
Operating expenses
Selling, general and administrative expenses		135,392			145,647
Share-based compensation		30,685			87,362
Asset impairment and restructuring costs		12,794			-
Total operating expenses		178,871			233,009
Operating loss		(172,376	)		(214,719	)
Loss from equity method investments		(7,189	)		(1,833	)
Other income (expense), net		48,205			32,768
Loss before income taxes		(131,360	)		(183,784	)
Income tax recovery (expense)		3,038			(10,267	)
Net loss		(128,322	)		(194,051	)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interest		(19,821	)		(8,182	)
Net loss attributable to Canopy Growth Corporation	$	(108,501	)	$	(185,869	)

Basic and diluted loss per share	$	(0.30	)	$	(0.54	)
Basic and diluted weighted average common shares outstanding		363,763,347			346,779,156

Comprehensive loss:
Net loss	$	(128,322	)	$	(194,051	)
Other comprehensive (loss) income, net of income tax effect
Fair value changes of own credit risk of financial liabilities		(15,360	)		14,610
Foreign currency translation		(53,124	)		(60,744	)
Total other comprehensive loss, net of income tax effect		(68,484	)		(46,134	)
Comprehensive loss		(196,806	)		(240,185	)
Comprehensive loss attributable to noncontrolling interests and redeemable noncontrolling interest		(19,821	)		(8,182	)
Comprehensive loss attributable to Canopy Growth Corporation	$	(176,985	)	$	(232,003	)


	Three months ended December 31, 2023
				Additional paid-in capital										Accumulated
	Common shares			Share-based reserve			Warrants		Ownership changes			Redeemable noncontrolling interest		other comprehensive income (loss)			Deficit			Noncontrolling interests		Total
Balance at September 30, 2023	$	8,219,846		$	507,358		$	2,590,765	$	(522,949	)	$	-	$	(24,799	)	$	(10,020,896	)	$	139	$	749,464
Other issuances of common shares and warrants		(447	)		-			-		-			-		-			-			-		(447	)
Share-based compensation		-			3,693			-		-			-		-			-			-		3,693
Issuance and vesting of restricted share units and performance share units		348			(348	)		-		-			-		-			-			-		-
Comprehensive loss		-			-			-		-			-		8,750			(216,797	)		-		(208,047	)
Balance at December 31, 2023	$	8,219,747		$	510,703		$	2,590,765	$	(522,949	)	$	-	$	(16,049	)	$	(10,237,693	)	$	139	$	544,663


	Nine months ended December 31, 2023
			Additional paid-in capital											Accumulated
	Common shares		Share-based reserve			Warrants		Ownership changes			Redeemable noncontrolling interest			other comprehensive income (loss)			Deficit			Noncontrolling interests			Total
Balance at March 31, 2023	$	7,938,571	$	498,150		$	2,581,788	$	(521,961	)	$	(51,492	)	$	(13,860	)	$	(9,672,761	)	$	1,587		$	760,022
Private Placement, net of issuance costs		12,836		9,820			8,977		-			-			-			-			-			31,633
Other issuances of common shares and warrants		252,576		(80	)		-		-			-			11,060			-			-			263,556
Exercise of Previous Equity Incentive Plan stock options		165		(165	)		-		-			-			-			-			-			-
Share-based compensation		-		10,127			-		-			-			-			-			-			10,127
Issuance and vesting of restricted share units and performance share units		7,149		(7,149	)		-		-			-			-			-			-			-
Changes in redeemable noncontrolling interest		-		-			-		-			(18,526	)		-			-			18,526			-
Ownership changes relating to noncontrolling interests, net		-		-			-		-			70,018			-			-			(1,436	)		68,582
Redemption of redeemable noncontrolling interest		8,450		-			-		(988	)		-			-			-			(12	)		7,450
Comprehensive loss		-		-			-		-			-			(13,249	)		(564,932	)		(18,526	)		(596,707	)
Balance at December 31, 2023	$	8,219,747	$	510,703		$	2,590,765	$	(522,949	)	$	-		$	(16,049	)	$	(10,237,693	)	$	139		$	544,663

			Balance at		Share of			Balance at
		Ownership	March 31,		net (loss)			June 30,
Entity	Instrument	percentage	2020		income			2020
PharmHouse	Shares	49%	$	37,025	$	(4,656	)	$	32,369
More Life	Shares	40%		10,300		-			10,300
CanapaR	Shares	49%		8,500		(329	)		8,171
Agripharm	Shares	40%		5,000		(2,937	)		2,063
Other	Shares	18%-27%		5,018		733			5,751
			$	65,843	$	(7,189	)	$	58,654

	Current		Non-current		Current		Non-current
Entity	assets		assets		liabilities		liabilities		Revenue		Net loss
PharmHouse	$	9,193	$	167,022	$	85,463	$	80,176	$	-	$	(9,019	)
CanapaR		14,006		11,328		2,126		-		110		(669	)
Agripharm		6,992		25,034		25,153		1,719		2,468		(7,342	)
Other		10,317		22,360		3,996		11,462		1,928		(2,588	)
	$	40,508	$	225,744	$	116,738	$	93,357	$	4,506	$	(19,618	)

									Exercise of
		Balance at							options /			Balance at
		March 31,				Fair value			disposal			June 30,
Entity	Instrument	2020		Additions		changes			of shares			2020
TerrAscend Canada	Term loan / debenture	$	53,820	$	-	$	10,960		$	-		$	64,780
TerrAscend	Exchangeable shares		47,000		-		6,000			-			53,000
TerrAscend	Warrants		25,004		-		10,306			-			35,310
PharmHouse	Loan receivable		40,000		-		-			-			40,000
ZeaKal	Shares		14,186		-		(586	)		-			13,600
Agripharm	Royalty interest		12,600		-		900			-			13,500
Greenhouse	Convertible debenture		10,517		-		(17	)		-			10,500
Other - classified as fair value through net income (loss)	Various		22,495		481		(4,628	)		-			18,348
Other - elected as fair value through net income (loss)	Various		9,483		1,519		(1,128	)		-			9,874
Other - classified as held for investment	Loan receivable		14,148		600		-			(36	)		14,712
		$	249,253	$	2,600	$	21,807		$	(36	)	$	273,624

Balance, March 31, 2019	$	1,489,859
Purchase accounting allocations		443,724
Finalization of S&B purchase price allocation		(24,990	)
Foreign currency translation adjustments		45,878
Balance, March 31, 2020		1,954,471
Foreign currency translation adjustments		(25,053	)
Balance, June 30, 2020	$	1,929,418

	As at June 30, 2020						As at March 31, 2020
	Current		Long-term		Total		Current		Long-term		Total
Acquisition consideration related liabilities	$	52,318	$	13,749	$	66,067	$	104,028	$	9,791	$	113,819
Lease liabilities		38,308		97,010		135,318		40,356		120,047		160,403
Minimum royalty obligations		11,437		49,043		60,480		9,368		50,445		59,813
Refund liability		8,433		-		8,433		17,586		-		17,586
Settlement liability		1,411		6,636		8,047		33,162		7,932		41,094
Other		12,850		1,801		14,651		11,309		2,445		13,754
	$	124,757	$	168,239	$	292,996	$	215,809	$	190,660	$	406,469

	Vert Mirabel
As at March 31, 2019	$	6,400
Income attributable to noncontrolling interest		2,715
Adjustments to redemption amount		(615	)
As at June 30, 2019	$	8,500

	Number of shares		Share capital		Share based reserve
Completion of acquisition milestones		751,922	$	12,079	$	(12,079	)
Other issuances		412,417		14,135		(14,719	)
Total		1,164,339	$	26,214	$	(26,798	)

	Number of whole warrants			Average exercise price		Warrant value
Balance outstanding at March 31, 2020¹		146,299,443		$	52.44	$	2,638,951
Exercise of warrants		(18,876,901	)		12.98		(70,266	)
Balance outstanding at June 30, 2020¹		127,422,542		$	58.29	$	2,568,685

	Options issued			Weighted average exercise price
Balance outstanding at March 31, 2020		32,508,395		$	34.89
Options granted		155,800			22.20
Options exercised		(711,472	)		6.64
Options forfeited/cancelled		(3,060,675	)		39.37
Balance outstanding at June 30, 2020		28,892,048		$	35.04

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Outstanding at June 30, 2020		Weighted Average Remaining Contractual Life (years)		Exercisable at June 30, 2020		Weighted Average Remaining Contractual Life (years)
$0.06 - $24.62		5,494,833		3.37		3,415,917		2.74
$24.63 - $35.00		5,944,019		4.65		1,618,363		3.65
$35.01 - $36.80		5,941,004		4.33		2,589,127		4.12
$36.81 - $42.84		5,224,455		4.22		2,424,909		4.00
$42.85 - $67.64		6,287,737		4.65		1,511,022		4.44
		28,892,048		4.26		11,559,338		3.67

	Seed capital options issued			Seed capital loan balance
Balance outstanding at March 31, 2020		2,805,560		$	140
Options exercised		(638,891	)	$	(32	)
Balance outstanding at June 30, 2020		2,166,669		$	108

	Canopy Rivers			Vert Mirabel			BioSteel			Other non- material interests		Total
As at March 31, 2020	$	211,086		$	7,132		$	489		$	3,051	$	221,758
Comprehensive loss		(3,883	)		(14,528	)		(1,410	)		-		(19,821	)
Net loss attributable to redeemable noncontrolling interest		-			9,253			1,410			-		10,663
Share-based compensation		1,301			-			244			-		1,545
Ownership changes		852			-			-			-		852
Warrants		250			-			-			-		250
As at June 30, 2020	$	209,606		$	1,857		$	733		$	3,051	$	215,247

	Fair value measurement using
	Quoted prices		Significant
	prices in		other		Significant
	active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
June 30, 2020
Assets:
Short-term investments	$	1,060,901	$	-	$	-	$	1,060,901
Restricted short-term investments		16,436		-		-		16,436
Other financial assets		1,602		55		217,257		218,914
Liabilities:
Convertible senior notes		-		485,898		-		485,898
Liability arising from Acreage Arrangement		-		-		285,000		285,000
Warrant derivative liability		-		-		287,122		287,122

March 31, 2020
Assets:
Short-term investments	$	673,323	$	-	$	-	$	673,323
Restricted short-term investments		21,539		-		-		21,539
Other financial assets		2,596		36		192,473		195,105
Liabilities:
Convertible senior notes		-		450,204		-		450,204
Liability arising from Acreage Arrangement		-		-		250,000		250,000
Warrant derivative liability		-		-		322,491		322,491


	Financial asset / financial liability		Valuation techniques	Key inputs
~~Convertible senior note~~	Unsecured senior notes	~~Convertible~~	Senior note pricing model	Quoted prices in over-the-counter broker market

	June 30, 2020			March 31, 2020
Ownership interest		27	%		27	%
Cash and cash equivalents	$	43,915		$	46,724
Prepaid expenses and other current assets		11,815			11,598
Investments in associates		46,291			50,543
Other financial assets		150,134			146,812
Other long-term assets		22,776			22,058
Other liabilities		(2,737	)		(2,771	)
Noncontrolling interests		(209,606	)		(211,086	)
Equity attributable to Canopy Growth	$	62,588		$	63,878

Revenue by Channel	Three months ended June 30,
(in thousands of Canadian dollars)	2020		2019		$ Change			% Change

Recreational net revenue
Business-to-business¹	$	34,934	$	38,881	$	(3,947	)		(10	%)
Business-to-consumer		9,330		10,638		(1,308	)		(12	%)
		44,264		49,519		(5,255	)		(11	%)
Medical net revenue
Canadian²		13,910		11,686		2,224			19	%
International		20,191		10,496		9,695			92	%
		34,101		22,182		11,919			54	%

Other revenue		32,051		18,781		13,270			71	%
Net revenue	$	110,416	$	90,482		19,934			22	%

¹ Includes excise taxes of $7,246 for the three months ended June 30, 2020 (three months ended June 30, 2019 - $11,544).
²Includes excise taxes of $1,426 for the three months ended June 30, 2020 (three months ended June 30, 2019 - $1,365).

Revenue by Form	Three months ended June 30,
(in thousands of Canadian dollars)	2020			2019			$ Change			% Change

Recreational revenue by form
Dry bud	$	40,129		$	60,854		$	(20,725	)		(34	%)
Oils and softgels		7,721			8,209			(488	)		(6	%)
Cannabis 2.0 products		7,060			-			7,060			-
Other revenue adjustments¹		(3,400	)		(8,000	)		4,600			58	%
Excise taxes		(7,246	)		(11,544	)		4,298			37	%
		44,264			49,519			(5,255	)		(11	%)
Medical revenue by form
Dry bud		10,205			7,210			2,995			42	%
Oils and softgels		25,008			16,337			8,671			53	%
Cannabis 2.0 products		314			-			314			-
Excise taxes		(1,426	)		(1,365	)		(61	)		(4	%)
		34,101			22,182			11,919			54	%

Other revenue		32,051			18,781			13,270			71	%
Net revenue	$	110,416		$	90,482		$	19,934			22	%

¹ Other revenue adjustments represent our determination of returns and pricing adjustments.

	Three months ended June 30,
(in thousands of Canadian dollars except where indicated)	2020			2019			$ Change			% Change
Net revenue	$	110,416		$	90,482		$	19,934			22	%

Cost of goods sold	$	103,921		$	72,192		$	31,729			44	%
Gross margin		6,495			18,290			(11,795	)		(64	%)
Gross margin percentage		6	%		20	%		-			(14	%)


	Aggregate Notional Value				Fair Value				Decrease in Fair Value - Hypothetical 1% Rate Increase
	June 30, 2020		March 31, 2020		June 30, 2020		March 31, 2020		June 30, 2020			March 31, 2020
Convertible senior note	$	600,000	$	600,000	$	485,898	$	450,204	$	(11,460	)	$	(11,490	)
Fixed interest rate debt		4,802		5,255	N/A		N/A		N/A			N/A
Variable interest rate debt		9,706		9,956	N/A		N/A		N/A			N/A


Exhibit Number		Description
~~3.1~~
3.1		Certificate of Incorporation and Articles of Amendment of Canopy Growth Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended March 31, 2020, filed with the SEC on June 1, 2020).
~~3.2~~
3.2		Amendment to Articles of Canopy Growth Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 18, 2023).

3.3		Bylaws of Canopy Growth Corporation (incorporated by reference to Exhibit 3.2 to the Company’s ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q for the ~~year~~quarterly period ended ~~March 31, 2020,~~September 30, 2021, filed with the SEC on ~~June 1, 2020)~~November 8, 2021).
~~10.1~~
10.1		~~Proposal~~Fifth Amendment to Arrangement Agreement, dated ~~as of June 24, 2020,~~December 29, 2023, by and ~~between~~among Canopy Growth Corporation, Canopy USA, LLC and Acreage Holdings, Inc. ~~(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on June 30, 2020).~~
~~10.2~~		~~Consent Agreement, dated as of June 24, 2020, by and between Canopy Growth Corporation and CBG Holdings LLC~~ (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on ~~June 30, 2020)~~January 2, 2024).

10.2*		Second Amended and Restated Protection Agreement, dated as of January 25, 2024, by and among Canopy USA, LLC, 11065220 Canada Inc. and Canopy Growth Corporation.

31.1*		Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document~~
~~101.CAL~~		~~Inline XBRL Taxonomy Extension Calculation~~With Embedded Linkbase ~~Document~~
~~101.DEF~~Documents		~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~		~~Inline XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	CANOPY GROWTH CORPORATION

Date: ~~August 10, 2020~~February 9, 2024	By:	/s/ David Klein
		David Klein
		Chief Executive Officer (Principal Executive Officer)

Date: ~~August 10, 2020~~February 9, 2024	By:	/s/ ~~Michael Lee~~Judy Hong
		~~Michael Lee~~Judy Hong
		Chief Financial Officer (Principal Financial Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company