CANADA – Chocolate manufacturer Hershey has struck a deal with Cannabis company Canopy Growth Corp. to repossess a facility in Canada that it sold in 2007.

Under the terms of the agreement, Reese’s maker will pay around C$53m ($39.2m) for the facility, which is in Smiths Falls.

Canopy Growth CEO David Klein explained that the sale of the 700,000-square-foot facility was part of a “focused effort to reduce costs and further enhance the company’s balance sheet.”

The strategic move is amid competition in Canada from illicit sources and the slowness of the federal legalization of cannabis in the US.

Other cost-saving measures announced by Canopy Growth earlier this year include laying off 800 workers and consolidating some of its cultivation operations.

Last month, Canopy Growth also signed agreements with lenders to reduce its debt by $437 million over the next six months.

The Smiths Falls facility will be the seventh property the company has sold since April 1. The sold properties will total C$155 million.

Todd Scott, Hershey’s senior communications manager, told CBC: “The purchase is a strategic acquisition and is another step in our continuing investment in our supply chain network to enable our leading snacking powerhouse vision.”

The facility provides us with the flexibility to support growth across the CMG [candy, mint, and gum] portfolio.”

Another spokesperson for Hershey said it was “premature for the company to speculate” on which brands could be made at the 700,000 sq ft facility and when the site could get up and running.

Although Hershey does not disclose the sales it generates in Canada, a 2022 annual report said the company has a distribution facility in Brantford, Ontario, which supports its business across North America. Hershey has its local office in Canada in Mississauga.

Canopy Growth acquired the site in 2017. At the time, the facility was the largest indoor cannabis production facility in Canada.

The site has been the headquarters of the firm and has served as Canopy Growth’s main production facility for flowers and edibles.

The company added that it will complete post-production flower activity at 99 Lorne St., which is across the street from 1 Hershey Dr., and already houses a regional distribution center and bottling facility for cannabis beverages.

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