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Nov 14, 2017

'I don't think they overtaxed': Canopy CEO on Feds' marijuana plan

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The CEO of Canada’s largest licensed medical cannabis producer does not believe the federal government’s tax on recreational marijuana will be too steep for most users.

Canopy Growth’s (WEED.TO) Bruce Linton told BNN on Tuesday that Ottawa’s numbers still keep legalized marijuana below black market prices.

“When it’s a recreational choice, it will be about $10 a gram, which is still about $2 a gram less costly than buying the illegal product and about $2 more costly than being a medical patient and getting the medical processes that we put in,” Linton told BNN in an interview.

“I think it will work. I don’t think that they overtaxed.”

The federal government proposed a $1 per gram tax excise tax on marijuana on Friday, plus applicable harmonized sales taxes, to boost the coffers of federal and provincial governments once the drug is legalized.

However, Linton still thinks the government can go further on medicinal marijuana

“I think if they wanted to do the absolute right thing, they would eliminate the tax on the medical products,” he said. “Over time, I bet that will happen because they will land in processes that turn them into drug identification number products and the sort of things that we would expect to not attract any tax.” 

Canopy Growth swung to a loss in its fiscal second quarter even as revenue more than doubled.

The company said on Tuesday its net loss in the latest three months ending Sept. 30 was $1.6 million, or one cent per share. In the same period a year ago, Canopy earned $5.4 million, or five cents per share.

"Management believes the ongoing spending on building the company's significant and diversified production platform, world-leading brands, unparalleled international reach, and iconic partnerships, all of which directly impacted profitability during the current period, is a prudent long-term investment to strengthen the Company's global leadership position heading into next year," Canopy said in a press release.

Revenue, meanwhile, surged 107 per cent in the second quarter to $17.6 million from $8.5 million a year earlier.

Canopy said it sold 2,020 kilograms and equivalents in the fiscal second quarter, marking a 73-per-cent rise from the previous year. The company's weighted average cost per gram dipped to $1.25 per gram from $1.70 a year earlier.