Canopy Growth falls 14% because Canadians didn't smoke enough legal marijuana

Canada's finest... Earth's biggest cannabis company (illegal cartels not included) just signed a joint venture with Drake north of the border. But shares of Canopy Growth plummeted 14% Thursday on word its $57M in quarterly sales were lower than expected. When recreational marijuana was legalized in October 2018, Canopy expected years of pent-up weed demand to drive mega sales. Turns out it overestimated.

• Canada's provinces are stuffed with too much unsold cannabis.
• Economics tells us that when there's oversupply, prices fall. Last year, Canopy sold marijuana for $8,084 per kilo on average. This year it's down to $5,963 per kilo.
• That’s a 27% drop in the price of Canopy's core product.

Legalize slowly... Canadians are a patient people, so their legalization rolled out in 2 phases. "Cannabis 1.0" was the first phase, including only marijuana leaves and oil. "Cannabis 2.0" is the freshly legal status of more approachable stuff for 1st-timers, like edibles and weed-infused beverages.

• Canopy's CEO says that 2.0 will “drive the next leg of growth.”
• So it just submitted 30 products for approval, including weed chocolate and drinks — and sales of those 2.0 products will start sprouting up in future Canopy earnings reports.