Revenue for its fiscal third quarter surged 282% compared to a year earlier, the company reported Thursday. Chairman and co-CEO Bruce Linton attributed the lift to the company's decision to make early, "meaningful" investments that helped it corner a big part of the Canadian market when the law took effect.
Canopy Growth also reported a wider loss from a year ago as expenses increased. It spent more on marketing, research and development.
But investors didn't seem to mind. Canopy Growth's stock rose 4% Friday, and is now up nearly 80% this year.
The company's strong results came a few days after rival Aurora Cannabis also posted a surge in sales during its latest quarter. Shares of that company's stock are up 40% for the year.
But, legal weed in Canada has introduced some new problems that these companies need to contend with. For example, pot prices have fallen.
Canopy Growth said in its earnings report that its overall average selling prices fell 12% compared to a year ago, even as prices for medical marijuana rose. Aurora said earlier this week that prices for dried cannabis and extracts each plunged more than 20%. Recreational pot is cheaper, partly because it is a much more competitive market.
Canopy Growth, though, is hoping that brand name recognition will help it stand out. Linton said the company's healthy sales numbers show that it is "capturing consumers' attention."
The company generates about a third of its sales from cannabis oils and softgel capsules. It's hoping to eventually make more money from newer consumer products, such as vape pens and beverages.
Along those lines, the company has the backing of US alcoholic beverage giant Constellation Brands. The Corona owner controls nearly 40% of Canopy Growth, a stake now worth more than $6 billion.
Canopy Growth is also planning its first foray into the United States. It wants to market hemp products, which the country legalized as part of last year's farm bill.
Last month, Canopy Growth announced that it received a license from New York state — where Constellation Brands is based — to process and produce hemp. That would allow it to develop products that contain CBD, the non-psychoactive compound that some say helps reduce anxiety and stress.
The company intends to spend between $100 million and $150 million to help set up a so-called Hemp Industrial Park in upstate New York, an investment that Senator Chuck Schumer of New York has said could create hundreds of jobs.
The enthusiasm for legal cannabis in the United States is growing. More states are legalizing recreational or medical uses of the drug. Wall Street has noticed, too: Several analysts from top brokerage firms have started to cover the companies.
Other cannabis stocks are also surging lately, fueling concerns that the sector could be a stock market bubble. Aphria, another competitor, is up 65%. And Cronos Group, which has a big investment from tobacco giant Altria, has more than doubled.