In a move to cut costs, Canadian producer Auxly Cannabis Group Inc. (TSX: XLY) (OTCQX: CBWTF) has closed two cultivation facilities in Nova Scotia.
On Monday, the firm said it shuttered its Robinsons facilities in Kentville and Hortonville, as it focuses on simplifying its cultivation platform and achieving its goal of becoming EBITDA-positive in the first half of the year.
Around 55 employees will lose their jobs related to the closures.
Auxly, formerly Wheaton Cannabis, acquired Robinson’s Cannabis for an undisclosed amount in April 2018.
That company ran a 27,700-square-foot indoor facility, as well as an outdoor cultivation project on 158 acres of land. Auxly says it never started cultivation at the latter site, instead using the space for additional storage and processing capacity.
The firm says the strategic decision will cause no material impact to its cultivation or processing capabilities, nor its forecasted sales. Proceeds from the sale will go toward funding core activities.
While CEO Hugo Alves says the move ultimately makes his company more focused, the decision was difficult because of the impact on the Robinsons employees.
“We are grateful for all of their efforts and will do our best to help support them through this period of transition,” he said in a statement.
“We are diligently working to ensure that we achieve our goal of reaching adjusted EBITDA positive by the first half of 2022 and deliver stable and profitable financial performance for our stakeholders,” he continues.
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“Optimizing our vertically integrated platform allows us to strengthen our capital position, increase the overall efficiency of our operations and enhance our ability to continue to meet the growing demand for Auxly branded products.”
As a result, the company says it’s better able to optimize output at its newly acquired greenhouse in Leamington, Ontario.
Formerly Sunens Farms Inc., the 1.1-million-square-foot facility is currently being used to produce the firm’s full suite of branded products.
Auxly says the Leamington site provides it with considerable extra cultivation, storage, processing and manufacturing space.
Update (2022-2-7 3:30 p.m. PT): This article has been updated with the number of employees affected by the closures.
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