(CNN ) Canopy Growth’s cannabis business is booming thanks to the legalization of recreational marijuana in Canada last fall.
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 (CGC) 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 (ACB) 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 soft gel 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 (STZ). The Corona owner controls nearly 40% of Canopy Growth, a stake now worth more than $6 billion.
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