Canopy Growth Slashes Jobs, Consolidates Cultivation As Losses Mount

Canadian cannabis company Canopy Growth saw net revenue sink 28% to C$101.2 million ($76m) in its fiscal third quarter ended in December. It logged a net loss of C$266.7 million ($200m), an adjusted EBITDA loss of C$87.5 million ($66m), and negative free cash flow of C$145.8 million ($109m).

After the disappointing results, Canopy announced the next phase of its multi-part plan to realign its business to current market realities. In a stark turnabout from its sprawling incarnation of just a few years ago, Canopy will transition to an “asset-light model” by exiting cannabis flower cultivation in the company’s Smiths Falls, Ontario facility, ceasing the sourcing of cannabis flower from the Mirabel, Quebec facility and consolidating cultivation at existing facilities in Kincardine, Ontario and Kelowna, British Columbia. It will move to third-party sourcing for all cannabis beverages, edibles, vapes, and extracts, saving on R&D and production. As a result, the company intends to consolidate flower, pre-rolled joints, softgel, and oil manufacturing in its current beverage production facility in Smiths Falls and close another facility in the same city while restructuring the joint venture controlling the Mirabel facility.

All together these moves will entail significant layoffs. Canopy plans to reduce its headcount by 60%. These initiatives are expected to reduce annual expenses, specifically cost of goods sold and selling, general & administrative, by around C$150 million ($112m) over the next 12 months.

“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” said CEO David Klein. “We are transforming our Canadian business to an asset-light model and significantly reducing the overall size of our organization. These changes are difficult but necessary to drive our business to profitability and growth.”—Danny Sullivan

Tagged : cannabis, Canopy Growth

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