Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) will sell its seventh cannabis facility to the popular chocolate Hershey Canada, Inc. for $53 million.
The company said on Thursday the money from the Hershey facility in Smiths Falls, Ontario will be used to pay down its senior secured credit facility. Since April, the company has had an aggregate gross amount of approximately CAD$155 million from selling its facilities.
However, the company said it will retain its Smiths Falls post-harvest manufacturing facility.
Canopy has centralized its post-harvest manufacturing operations at its former beverage facility and all flower cultivation at the Kincardine, Ontario and Kelowna, British Columbia sites.
The company said that the centralization in purpose-built facilities and working with contract manufacturers for edibles, beverages and vape products has allowed the company to optimize its capability to deliver quality faster while reducing risks.
After the announcement, Canopy Growth stocks saw a 10 per cent increase to $0.56 in the Toronto Stock Exchange after the market opened on Thursday.
Read more: Canopy Growth reports net revenue of $109M in Q1 2024
Read more: Canopy Growth advances transformation strategy with sale of fifth facility
Canopy Growth employed 1,500 people in Smiths Falls and reports say there are approximately 400 to 500 employees still in the town. Canopy Growth had already announced plans to close the building months ago and laid 800 workers across the company.
“Each of the steps we have taken as part of our transformation to a simplified, asset-light operating model supports our ability to deliver in-demand products from brands our customers love, with greater agility and less execution risk,” CEO David Klein said in a statement.
Hershey Canada started operating in Smiths Falls in 1961, however, in 2007, the company decided to phase out production at the plant.
“Our intent to purchase the Hershey Drive property in Smiths Falls is another example of the strategic investments we’re making in our supply chain network and our Canadian operations to support growth,” said Jason Reiman, Chief Supply Chain Officer for The Hershey Company.
Canopy Growth announced last June it was selling its Modesto, California facility. The company has lost approximately $4.2 billion since 2018.
