Mr. David Klein reports

CANOPY GROWTH TO CEASE FUNDING BIOSTEEL BUSINESS UNIT FURTHERING BUSINESS TRANSFORMATION AND FOCUS ON NORTH AMERICAN CANNABIS LEADERSHIP

Canopy Growth Corp. has ceased financing BioSteel Sports Nutrition Inc. BioSteel has commenced proceedings under the Companies' Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice (commercial list) and will seek recognition of that proceeding under Chapter 15 of the United States Bankruptcy Code to give full force and effect to the orders made in the CCAA proceeding in the United States, including a stay of proceedings.

As part of its efforts to simplify its business and reduce cash burn, Canopy Growth previously announced that it was reviewing strategic options for the company's BioSteel business unit, including a potential sale of the business unit. BioSteel's business was a significant drag on Canopy Growth's profitability and cash flow, representing approximately 60 per cent of the company's Q1 FY 2024 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss. The decision by BioSteel to seek creditor protection means that Canopy Growth will limit the further financing obligations in respect of the BioSteel business unit, which is consistent with Canopy Growth's transformation to a simplified, asset-light operating model and focus on its core cannabis operations.

Canopy Growth's financial position is expected to be further strengthened through the immediate removal of the cash expenditures associated with financing the BioSteel business unit and the potential cash proceeds from the orderly sale of BioSteel's assets. Further, the company anticipates the removal of the previously identified material weakness related to the BioSteel business segment upon disposition. In addition, with BioSteel's operating loss and cash burn eliminated, Canopy Growth reiterates its expectation to achieve positive adjusted EBITDA across its remaining business units exiting FY 2024.

"Canopy Growth has marked yet another major milestone in our transformation plan as, while BioSteel's business has shown significant year-over-year revenue growth and we believe the brand remains an attractive asset, it does not align with Canopy Growth's cannabis-focused asset-light strategy. We have repeatedly demonstrated that we will take decisive action to enhance our profitability and ensure we are focused and positioned to be a leader in the North American cannabis sector," said David Klein, chief executive officer.

Recent transformation plan highlights:

• Since July 1, 2023, reduction of the company's overall debt by approximately $349-million, with further reductions totalling approximately $95-million expected over the next two quarters.
• Agreement to sell Hershey Drive facility for $53-million. Upon the completion of the sale, Canopy Growth will have sold a total of seven properties for an aggregate gross amount of approximately $155-million since April 1, 2023.
• Achieved cost reductions of $47-million in Q1 FY 2024, bringing total cost reductions to $172-million since the beginning of FY 2023.
• Management continues to expect restructuring initiatives announced in FY 2023 to deliver combined selling, general and administrative expense, and cost of goods sold reduction of $240-million to $310-million by the end of FY 2024.
• United States THC (tetrahydrocannabinol) companies that are expected to be acquired by Canopy USA LLC continue to demonstrate momentum, strengthening and expanding their businesses, and Canopy Growth continues to work with regulators to advance its novel structure.

BioSteel has obtained an initial order from the CCAA court which provides for, among other things: (i) a stay of proceedings in favour of BioSteel and its two U.S. affiliates, BioSteel Sports Nutrition USA LLC and BioSteel Manufacturing LLC; and (ii) the appointment of KSV Restructuring Inc. as monitor of BioSteel.

The CCAA process will allow the BioSteel business to maximize the value of its assets through a court-supervised sales process. Canopy Growth remains BioSteel Canada's largest creditor and shareholder, and anticipates receiving its proportionate share of any recoveries in the CCAA process.

About Canopy Growth Corp.

Canopy Growth is a leading North American cannabis and consumer packaged goods (CPG) company dedicated to unleashing the power of cannabis to improve lives. Through an unwavering commitment to its consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands, including Doja, 7Acres, Tweed and Deep Space. Canopy Growth's CPG portfolio features targeted 24-hour skincare and wellness solutions from This Works, gourmet wellness products by Martha Stewart CBD, and category-defining vaporizer technology made in Germany by Storz & Bickel.

Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the United States THC market through its rights to Acreage, a vertically integrated multistate cannabis operator with principal operations in densely populated states across the northeast, as well as Wana Brands, a leading cannabis edible brand in North America, and Jetty Extracts, a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology.

Beyond its world-class products, Canopy Growth is leading the industry forward through a commitment to social equity, responsible use and community reinvestment, pioneering a future where cannabis is understood and welcomed for its potential to help achieve greater well-being and life enhancement.

We seek Safe Harbor.