CANADA – Canadian cannabis infused beverage producer, Canopy Growth Corporation has unveiled the company’s production optimization plan that will result into the elimination of approximately 500 positions.
As part of the Canopy’s effort to align supply and demand while improving production efficiencies over time, the Constellation Brands backed company plans to close its facilities in Aldergrove and Delta, British Columbia, western Canada.
In addition, the Company no longer plans to bring a third greenhouse online in Niagara-on-the-Lake, Ontario.
The greenhouses in British Colombia account for approximately 3 million square feet of licensed production space and were put into commission in February 2018.
This followed a period of phased retrofitting to help Canopy Growth scale up to supply the new Canadian adult-use market.
Nearly 17 months after the creation of the legal adult-use market, Canopy says that the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry.
Additionally, federal regulations permitting outdoor cultivation were introduced after the Company made significant investments in greenhouse production.
Canopy now operates an outdoor production site to allow for more cost-effective cultivation, which the company believes 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 that these facilities in Aldergrove and Delta, British Columbia are no longer essential to its cultivation footprint.
“When I joined Canopy Growth earlier this year, I committed to focusing the business and aligning its resources to meet the needs of our consumers,” shared Canopy Growth CEO, David Klein.
“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.
“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.”
Along with this announcement, the company expects to record estimated pre-tax charges of approximately CAD700-800m in Q4 Fiscal 2020 ending 31st March, as the company completes its organizational & strategic review.