On September 14, 2023, following a review of the strategic options for the BioSteel business unit, Canopy Growth ceased funding the operations of BioSteel Sports Nutrition Inc. ("BioSteel Canada") and commenced proceedings (the "CCAA Proceedings") under the Companies' Creditors Arrangement Act (the "CCAA") in the Ontario Superior Court of Justice (Commercial List) (the "CCAA Court") and sought and obtained recognition of that proceeding under Chapter 15 of the United States Bankruptcy Code. To assist with the sale process, the Court approved the appointment of a monitor.

As a result of the CCAA Proceedings, the most relevant activity of BioSteel Canada became the liquidation and sale of assets. Management concluded that Canopy Growth ceased to have the power to direct the relevant activity of BioSteel Canada because the liquidation and sale transactions required approval from the CCAA Court. Thus, Canopy Growth no longer has a controlling interest in BioSteel Canada and has deconsolidated the entity effective September 14, 2023. The deconsolidation of BioSteel Canada and related impairment charges are classified under losses from discontinued operations.

The strategic decisions made encompassed all operations of the BioSteel business unit, including those of BioSteel Canada. For this reason, the BioSteel segment results for all periods prior to the September 14, 2023 deconsolidation of BioSteel Canada, including costs to exit, are classified as discontinued operations.

On November 16, 2023, BioSteel Sports Nutrition USA LLC ("BioSteel US") and BioSteel Manufacturing LLC ("BioSteel Manufacturing" and collectively with BioSteel Canada and BioSteel US, the “BioSteel Entities”) were added as additional applicants in the CCAA Proceedings. As a result, the most relevant activity of both entities became the liquidation and sale of assets and distribution of cash and proceeds to their respective stakeholders and management concluded that Canopy Growth ceased to have the power to direct the relevant activities of BioSteel US and BioSteel Manufacturing because those activities required approval from the CCAA Court. Thus, Canopy Growth no longer has a controlling interest in either entity and has deconsolidated both entities effective November 16, 2023. The deconsolidation of BioSteel US and BioSteel Manufacturing and related impairment charges are classified under losses from discontinued operations.


	Three months ended						Nine months ended
	December 31,			December 31,			December 31,			December 31,
	2023			2022			2023			2022
				(As Restated)						(As Restated)
Net revenue	$	172		$	19,181		$	56,610		$	50,351
Cost of goods sold		1,900			24,504			145,625			64,779
Operating expenses		(726	)		33,405			97,851			143,423
Operating loss		(1,002	)		(38,728	)		(186,866	)		(157,851	)
Other income (expense), net1		14,481			2,150			(8,521	)		(10,687	)
Income tax (expense) recovery		-			(954	)		936			(954	)
Net income (loss) on discontinued operations, net of tax	$	13,479		$	(37,532	)	$	(194,451	)	$	(169,492	)

1 Included in Other income (expense), net for the three and nine months ended December 31, 2023 is a gain on deconsolidation of $12,417 and loss on deconsolidation of $9,820, respectively.

Canopy Growth continues to have a 90.4% ownership interest in BioSteel Canada and 100% ownership interests in each of BioSteel US and BioSteel Manufacturing, but has deconsolidated the BioSteel Entities because it no longer has a controlling interest in them. Since the estimated amount of the liabilities of the BioSteel Entities exceeds the estimated fair value of the assets available for distribution to its creditors, the fair value of Canopy Growth's equity investment in the BioSteel Entities approximates zero.

Prior to Canopy Growth's deconsolidation of BioSteel Canada, Canopy Growth made significant secured loans to BioSteel Canada for purposes of funding its operations. The secured loans and corresponding interest were considered intercompany transactions and eliminated in Canopy Growth's consolidated financial statements prior to September 14, 2023, being the deconsolidation date. As of the deconsolidation date, the secured loans and corresponding interest are now considered related party transactions and have been recognized in Canopy Growth's consolidated financial statements at their estimated fair value of $29,000.

As of the deconsolidation date for BioSteel US and BioSteel Manufacturing, Canopy Growth has recorded remaining amounts legally receivable from BioSteel US and BioSteel Manufacturing at their estimated fair value.

The remaining amounts legally receivable from the BioSteel Entities are measured at their expected recoverable amounts. The assets and liabilities related to the BioSteel Entities business units are classified as discontinued operations and the major categories are as follows:


	December 31,		March 31,
	2023		2023
Cash	$	-	$	9,314
Short-term investments		-		69
Amounts receivable, net		-		25,528
Receivable from BioSteel Entities		29,401		-
Inventory		-		65,671
Prepaid expenses and other assets		-		15,709
Property, plant and equipment		-		28,195
Intangible assets		-		27,969
Other assets		-		405
Total assets of discontinued operations	$	29,401	$	172,860

Accounts payable		-		44,399
Other accrued expenses and liabilities		-		22,248
Other current liabilities		-		977
Deferred income tax liabilities		-		954
Other liabilities		-		2,463
Total liabilities of discontinued operations	$	-	$	71,041

On December 18, 2023, the Company entered into an agreement to divest all of its interest in This Works to a London-based investment firm (the “This Works Divestiture”). The Company completed the This Works Divestiture on December 18, 2023, pursuant to which the Company received a cash payment of $2,249 (£1,333) and a loan note of $5,240 (£3,106) with a maturity date of December 18, 2027. The Company may receive an earnout payment of up to $5,905 (£3,500), subject to certain financial targets.

Prior to closing of the This Works Divestiture, the net assets of This Works were recorded as held for sale and the Company recorded asset impairment and restructuring charges of $28,144. Upon the completion of the This Works Divestiture, the Company no longer controls This Works and derecognized the assets and liabilities on the closing date:


Current assets1	$	13,793
Intangible assets		16,828
Less: valuation allowance		(20,154	)
Current liabilities		(6,661	)
Cumulative translation adjustment		2,322
Net assets disposed	$	6,128

Consideration received in cash	$	2,249
Future cash consideration		7,286
Costs to sell		(3,407	)
Total consideration	$	6,128

Gain on disposal of consolidated entity	$	-

1 Included in current assets is $5,968 of cash.

The gain calculated on the derecognition of the assets and liabilities of This Works is the difference between the carrying amounts of the derecognized assets and liabilities, and the fair value of consideration received, net of costs to sell.