We have a smooth path into the U.S: Canopy CEO optimistic on growth south of the border
Canopy Growth Corp. said Wednesday that it plans to shut down operations across five of its Canadian operations, a move that would lay off 220 workers and save up to $200 million annually.
Canopy said its indoor facilities in Newfoundland and Labrador, New Brunswick, Alberta and Bowmanville, Ont. will be closed, as well as its outdoor growing operations in Saskatchewan. The closures reflect about 17 per cent of the company's indoor growing capacity in Canada and all of its outdoor operations, Canopy said in a statement.
As a result of the closures, Canopy said it will take charges of between $350 million and $400 million in the third and fourth quarters of its current fiscal year.
"As part of the end-to-end review of our operations that we outlined during our second-quarter earnings call, we have made the decision to close a number of our production facilities," said Canopy Chief Executive Officer David Klein in a statement.
"We are confident that our remaining sites will be able to produce the quantity and quality of cannabis required to meet current and future demand."
This is the third major round of layoffs Canopy has announced this year. In March, the company said it would close two of its British Columbia greenhouses as well as stop construction on a greenhouse in Niagara-on-the-Lake, Ont., resulting in 500 people losing their jobs. A month later, Canopy said about 200 people would be let go across its Canadian, U.K. and U.S. businesses as part of a plan to pare some global operations.
Klein described the facility closures as "one of our final steps towards improving the overall health of the organization" in an internal email announcing the layoffs to staff on Wednesday.
"Remember that we’re trying to build something special together but there are real changes we need to make in order to make that possible," Klein said in the email.
Canopy Growth has not reported a profitable quarter since cannabis was legalized in Canada, as the company vastly overshot demand expectations in the domestic recreational market. As a result, the company holds a vast oversupply of legal marijuana. The company's struggles are not unique, however, with other major operators such as Aurora Cannabis Inc. and Tilray Inc. similarly shutting down underperforming production facilities over the past year.