Canopy Growth Corp. co-Chief Executive Bruce Linton defended the company’s widening paper losses Friday by contending that paying employees with stock is every cannabis company’s financial and social responsibility.

The world’s largest cannabis company reported C$93.1 million in stock-based compensation in the final quarter of its fiscal year Thursday evening, amounting to just more than half of the company’s disappointing operational losses. Investors sent Canopy stock CGC, -2.26% WEED, -2.16% down more than 8% Friday after the results were released, taking other stocks in the cannabis sector down with it.

In a telephone interview with MarketWatch on Friday, Linton focused on the stock compensation, contending that giving every employee stock makes the entire business stronger.

“I think people should say, ‘That’s awesome’,” Linton said. “It’s not like Bruce took it all. It’s distributed across the company in a very nice way so that everybody is aligned, works really hard and wants to make it successful.”

“If we had zero stock-compensation loss, we would have a much lower loss and a much worse company,” he continued. “It’s an accounting element that I don’t think makes people appreciate the value of options, that I’m hugely in favor of.”

Linton — who had 666,667 options and 2,742,511 shares of common stock in 2018, according to documents filed with Canadian securities regulators — says that anybody who makes less than $200,000 a year should receive 1½ times their starting salary in options on their first day at a cannabis company. Linton says that states in the U.S. should issue a mandate requiring stock compensation for every employee working in the marijuana industry.

“The effect will be that this might be the New Deal economy,” Linton said. “If they did this right, it could have corporate-social outcomes that are way better aligned with changing who gets rich at the top … Every place that talks about corporate social responsibility and corporate social justice should say, ‘How can we actually do that so it’s not just to a small cohort at the top of the ownership structure but inclusive of everyone that participates in the sector.’”

The stock-compensation losses were nearly a third of Canopy Growth’s overall net losses of C$323.4 million, more than three times what analysts expected. Beyond stock compensation and actual operational expenses such as payroll, its losses also included a significant paper charge of more than C$130 million as Canopy had to account for the growth of its stock price in the first three months of the calendar year because of rules regarding the company’s convertible debt.

Also read:Canopy Growth’s quiet co-CEO on the pot company’s ambitions in the U.S. and more

Revenue, net of excise taxes, rose to C$94.1 million from C$22.8 million in the year-ago period, and were up sequentially from C$83 million in the third quarter. According to FactSet, analysts on average modeled losses of C$95.2 million, or 25 cents a share. Net of excise taxes, analysts expected Canopy Growth to bank C$90.6 million in fourth-quarter revenue.

When asked in the conference call Friday about a sequential decline of recreational pot sales to C$68.9 million from C$71.6 million — the company also sold fewer kilograms — Linton said that was a result of both the company’s production in prior quarters and the fact that bricks-and-mortar retail is slow to open in provinces such as Alberta and Ontario.

“Obviously when Alberta needed to pause, in their opinion, the additional licensing of stores and Ontario got going in April, that kind of made the platform static,” Linton said in the conference call. “What we’re seeing is a lot more stores opening obviously in Alberta and we’re seeing quite a bit more discussion and rumor about whether Ontario will do some more sooner. So the channel is growing.”

Linton said in the call that he expects about half the provinces will be able to launch edible products immediately on Dec. 16, when sales are set to begin, adding that the private companies involved are reacting more quickly than the government-run stores. Linton also said that the company believes it can hit a C$1 billion revenue “run rate” by fiscal fourth quarter 2020, mostly thanks to Canada sales.

Canopy Growth said that it was still ramping production of cannabis to meet demand, with harvest size doubling in its fiscal fourth quarter — the first calendar quarter — and expected to double again in the current quarter to 34,000 kilograms.

Turning toward the U.S., Canopy Growth said that it planned to pay Acreage Holdings Inc. shareholders $300 million for the right to acquire Acreage in the future for $3.4 billion in stock, which was approved by stockholders Wednesday.

For more:In ‘the marijuana ghetto’ at Davos, Canopy Growth found its American pot partner

In the conference call, CEO Linton said that in the long run, Canopy Growth will have the capacity to use its hemp facilities to grow and process marijuana once it’s legalized under U.S. federal law. For its current hemp and CBD operations, Lindon said that there are a number of states that will allow a “full spectrum” of CBD products including drinks, edibles — so long as Canopy doesn’t make health claims.

Chief Financial Officer Mike Lee, who joined Canopy Growth from Constellation Brands Inc. STZ, -2.51% , said in the conference call that he plans to implement several changes to the company’s accounting policies: he plans to issue segmented revenue in the future, move the company’s accounting policies to U.S.-generally accepted accounting principals, and attempt to integrate acquisitions more quickly, among other things.

Constellation said Friday that its share of Canopy Growth’s fourth-quarter losses was $106 million, or $78.2 million after including tax benefits.