Photo: The Canadian Press

TORONTO — Canopy Growth Corp.’s shares fell more than 10 per cent after the cannabis producer reported a wider quarterly loss and revenue slowdown as operating expenses soared ahead of Canada’s legalization of recreational pot, which also served as a “distraction” for medical patients.

The slowdown in revenues during the quarter ended Sept. 30 stemmed from “hiccups” in shipping medical cannabis to Germany and the “hubbub” around the legalization of adult use pot on Oct. 17 distracting its medical patient base, said Canopy’s co-chief executive Bruce Linton.

There was little revenue during the quarter from the Canadian adult use market, with only limited shipments “stress testing” the system with provinces and territories, he added.

“It is the first time in our history that I’m aware of that we actually had a slowdown, but it was more of a distraction than a pattern,” Linton told analysts on a conference call Wednesday.

Revenue for what was Canopy’s second quarter of its 2019 financial year totalled $23.3 million, up from $17.6 million a year ago but down sequentially from $25.9 million in the previous quarter.

The Smiths Falls, Ont.-based company reported a loss of $330.6 million in the quarter, amounting to $1.52 per share compared with a loss of $1.6 million or a penny per share a year ago. Analysts had expected a loss of 12 cents per share, according to Thomson Reuters Eikon.

The loss comes as the pot producer’s operating expenses soared to $180.6 million during the quarter, nearly six times the $27.7 million it spent during the three months ended Sept. 30, 2017.

While the latest quarter did not encompass sales of recreational pot in Canada on and after legalization day on Oct. 17, Canadian cannabis producers had ramped up production and embarked on a marketing blitz in the leadup to the historic shift in drug policy.

Canopy spent $39 million on sales and marketing last month, up significantly from $7.6 million one year earlier. However, the company expects these expenses to lessen going forward amid tighter government regulations on pot promotion post-legalization.

Shares of the licensed producer on the Toronto Stock Exchange were down 10.6 per cent at midday on Wednesday to $45.48. In New York, Canopy’s shares were down nearly 11 per cent to $34.29.