The lobby of Canopy Growth’s Tweed facility in Smiths Falls, Ontario. (Photo by Justin Tang)
Cannabis producer Canopy Growth is shuttering more facilities across Canada amid a fresh round of layoffs in an effort to streamline operations and improve margins, the struggling company announced Wednesday.
The cuts come amid a broad supply-demand imbalance in the Canadian cannabis industry. The glut has resulted in a mountain of cannabis inventory – both unpackaged and packaged – sitting in warehouses.
Approximately 220 employees will lose their jobs as part of the latest closures, and the Smiths Falls, Ontario-based producer is abandoning outdoor cannabis cultivation in Canada.
As a result of the latest moves, Canopy expects to record pretax charges of up to 400 million Canadian dollars ($312 million) in the third and fourth quarters of the current fiscal year.
In a news release, Canopy said it will “cease operations” at its sites in:
- St. John’s, Newfoundland and Labrador.
- Fredericton, New Brunswick.
- Edmonton, Alberta.
- Bowmanville, Ontario.
The production sites represent roughly 17% of Canopy’s greenhouse and indoor Canadian footprint, Canopy said.
The decision to close the sites came after an end-to-end review of the company’s operations, Canopy CEO David Klein said in the announcement.
“These actions will be an important step towards achieving our targeted $150-$200MM of cost savings and accelerating our path to profitability,” Klein said.
The review, announced during the company’s second-quarter earnings call, looks at people, process, technology and infrastructure.
The company expects to record estimated total pretax charges of approximately CA$350 million to CA$400 million in the third and fourth quarters of fiscal 2021.
Canopy also said it will shut down its outdoor cannabis grow operations in Saskatchewan.
That means Canopy will be completely out of the outdoor cultivation business.
The move comes as Canada is awash in outdoor cannabis cultivation capacity. The country’s producers sat on nearly three times more licensed outdoor-grown canopy than indoor capacity this past summer.
Canopy has not made a profit in recent years.
Over the past four quarters, Canopy has lost over CA$1.5 billion, including a net loss of CA$97 million in its most recent quarter ended Sept. 30.
In lieu of answering questions from Marijuana Business Daily, Canopy Vice President of Communications Jordan Sinclair provided the following statement:
“Canopy Growth has made the strategic decision to close five of its production facilities as a result of the larger restructuring efforts outlined by the company earlier this year. This change comes as the Company continues to adjust its operations to match market demand. After careful analysis, we are confident our remaining sites will be able to produce the right breadth, quality, and quantity of cannabis products to our consumers.
“These decisions are never easy and we want to thank the employees affected for their contributions to Canopy Growth.”
Canopy’s shares trade as CGC on the New York Stock Exchange and WEED on the Toronto Stock Exchange.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].
