Canada: Canopy Growth lays off 800 people, closes Hershey facility

Canopy Growth Corporation, one of Canada's largest cannabis companies, announced yesterday, February 9, that it will lay off approximately 800 workers, 35% of its workforce. The company also stated that 40% of these redundancies will take effect immediately, with the rest taking place over the next few months. Canopy has also announced that it will close its former Hershey Factory facility near Ottawa, Canada.

“We are transforming our Canadian business into a model asset-light and to significantly reduce the overall size of our organization. These changes are difficult but necessary to drive our business to profitability and growth.” said David Klein, the CEO of Canopy Growth Corporation.

The company is transitioning to a model asset-light in Canada, abandoning the cultivation of cannabis flowers in Smiths Falls, thereby ceasing the supply of cannabis flowers at the Mirabel facility in Québec, and shifting to a model of third-party sourcing of beverages, edibles, vapes, and cannabis extracts.

According to the company, these cost-cutting initiatives will reduce its annual expenses by $140 million to $160 million over the next 12 months.

Former CEO and President of Canopy Growth Corporation, Bruce Linton, commented on the recent news to City News, saying: "It was a bit of a punch in the gut... As for Canopy, every three months for the past three years, they've sold less cannabis than before and are seeing sales go down."

Canopy Growth reported a net loss of USD 266,7 million (approximately EUR 249,3 million) for the quarter ended December 31, compared to a net loss of USD 115,5 million (approximately EUR 108 million) in the same quarter of the previous year.

The higher loss was mainly driven by non-monetary changes in fair value and an increase in asset impairment and restructuring costs. The company's third quarter financial year net income was $101,2 million (approximately EUR 94,6 million), compared to $141,0 million (approximately EUR 131,8 million) in the prior year .

Linton added: "Discipline is only part of the equation... If you're not innovating and mastering growth, I don't know if you'll ever be able to save enough to catch up with declining sales", and that he wishes he'd never been fired from the company he helped build, "but who knows, sometimes you can buy things back at a penny for a dollar."

The premises located in the former Hershey factory, 1 Hershey Drive, which had been Canopy's headquarters and its main flower and edible production site, also housed office space.