The world’s biggest weed company, Canopy Growth Corporation (TSX: WEED and NYSE: CGC), is scaling back its worldly operations.
On Thursday, the company said in a statement that it will be closing doors at facilities across three continents, in a move to reduce non-essential, capital-heavy investments.
Canopy said it expected to take a $700–800 million hit in related pre-tax charges over the fiscal quarter ending March 31. A reported 85 full-time jobs will be lost in the process.
This is the latest in an aggressive series of cutbacks spearheaded by CEO David Klein, who took on the position in January. In March, Canopy shuttered two key B.C. greenhouses, resulting in the loss of 500 jobs.
Read more: Constellation finance chief David Klein appointed as new Canopy CEO
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The former financial chief of Constellation Brands said he’s following a strategic commitment he made to reduce the company’s cost structure and cash burn.
“I believe the changes outlined today are an important step in our continuing efforts to focus the company’s priorities, and will result in a healthier, stronger organization that will continue to be an innovator and leader in this industry,” Klein said in the statement.
Canopy listed the following closures:
- Africa: Canopy has entered into an agreement to exit its operations in South Africa and Lesotho, targeting a transfer of ownership of all of its African operations to a local business. The company expects to close the transaction in the coming weeks.
- Canada: Canopy will shut down its indoor facility in Yorkton, Saskatchewan, to further align production in Canada with market conditions. The company said it’s confident its production capacity in Canada will meet consumer demand into the future.
- Latin America: Canopy will cease operations at its cultivation facility in Colombia, moving to an asset-light model that leverages local suppliers for raw materials and Procaps for formulation and encapsulation activities as outlined in the previously announced agreement between the two companies. These activities will support the position of Colombia as the company’s Latin America production hub, Canopy said, and the ongoing development of its cannabis industry.
- United States: Canopy will cease its farming operations in Springfield, New York, due to an abundance of hemp produced in the 2019 growing season. The company says it will continue using this supply to produce hemp-derived CBD products for the U.S. market.
Top image via Canopy
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