In a statement entitled “Canopy Growth Announces Production Optimization Plan in Canada,” the world’s largest cannabis producer said it’s shuttering two major greenhouses in B.C., confirming earlier leaks and the termination of 500 jobs.
Canopy Growth Corporation (TSX: WEED and NYSE: CGC) said it plans to close facilities in Aldergrove and Delta, which account for approximately 3 million square feet of licensed production space. Canopy also said it has cancelled plans to bring a third greenhouse online in Niagara-on-the-Lake, Ont.
The company’s statement was released after news of the shutdowns was leaked on Twitter by Betting Bruiser, a cannabis business consultant who frequents the social media platform with information from people inside the industry.
More breaking on $CGC $WEED news… employees at its two BC greenhouses have been told that the Aldergrove and Delta facilities will be shut down. As I predicted Aldergrove but both is troubling…@KirkTousaw I guess is going have to retire again. #PotStocks
— Betting Bruiser (@BettingBruiser) March 4, 2020
In the statement, Canopy cited a slower than expected recreational market and the delayed addition of legislation to allow for low-cost outdoor growing as being among the reasons for the shutdowns.
The company said it now operates an outdoor production site, located in northern Saskatchewan, to allow for more cost-effective cultivation. It said the site will “play an important role in meeting demand on certain products that rely on cannabis extracts.”
“Following an organizational strategic review of production capacity and forecasted demand, the company announced today that these facilities in Aldergrove and Delta, British Columbia are no longer essential to its cultivation footprint,” Canopy said.
CEO David Klein, who took on the role in January after serving as the CFO of Constellation Brands, said he committed to focusing the business and aligning its resources to meet the needs of consumers.
“Today’s decision moves us in this direction, and although the decision to close these facilities was not taken lightly, we know this is a necessary step to ensure that we maintain our leadership position for the long-term,” Klein said. “Along with the rest of the management team, I want to sincerely thank the members of the team affected by this decision for their work and commitment to building Canopy Growth.”
Canopy also said it expects to record estimated pre-tax charges of approximately $700-800 million in the quarter ending March 31, 2020, reflecting today’s announcement as well as additional changes related to its organizational and strategic review.