(Bloomberg) — Canopy Growth Corp. shares fell the most since December after the world’s biggest cannabis company reported a steeper-than-expected loss and weak gross margins.The message from the company Friday is that it’s short-term pain for long-term gain as it builds new facilities for growing and processing cannabis around the world and spends to prepare for the launch of beverage, edible and vape products in Canada.The Smiths Falls, Ontario-based company reported adjusted gross margin of 16% for the fiscal fourth quarter ended March 31. That was well below the consensus analyst estimate of 24% and a decline from 22% in the prior quarter. Its loss before interest, taxes, depreciation and amortization was C$98 million ($74 million), much wider than the expected C$64 million loss.At the end of 2017, Canopy had 600,000 square feet of licensed growing space and a gross margin above 50%, said Chief Executive Officer Bruce Linton.“We could have stayed there and we would have been a nice tidy little company, probably quite profitable,” Linton said on the company’s earnings call Friday. But when it attracted a $4 billion investment from Constellation Brands Inc., “you need to use that capital to build scale, and we did.”Linton said the fiscal fourth quarter represented “the bottom of our margin trough,” and gross margins are expected to rise above 40% by the end of fiscal 2020, which runs until March 31. Canopy should also report positive earnings before interest, taxes, depreciation and amortization from its Canadian operations by the end of fiscal 2021, according to Chief Financial Officer Mike Lee.The stock fell as much as 9% in Toronto, the biggest intraday drop since Dec. 5.Canopy’s quarterly revenue of C$94 million was ahead of the consensus estimate of C$92 million but core cannabis revenue declined 7.4% to C$70 million from C$76 million in the previous quarter, according to Canaccord Genuity analyst Matt Bottomley.“As the company continues to ramp up its infrastructure, operating losses fell a bit shy of our expectations,” Bottomley wrote. “But given that the industry is still in a rather steep ramp-up phase and with C$4.5 billion of cash on its balance sheet, we are not overly concerned with profitability for the quarter.”(Updates with share move, comments from earnings call.)To contact the reporter on this story: Kristine Owram in Toronto at firstname.lastname@example.orgTo contact the editors responsible for this story: Brad Olesen at email@example.com, Jacqueline Thorpe, Morwenna ConiamFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.