Canopy Growth Corporation, one of the largest cannabis companies in the world, announced a major change in its Canadian operations today. Company has announced to shutdown its facility impacting 800 employees.
The company is shifting to an “asset-light” model by exiting the cultivation of cannabis flower in its Smiths Falls, Ontario facility, as well as ceasing the sourcing of cannabis flower from its Mirabel, Quebec facility. Instead, the company will rely on third-party sources for its cannabis beverages, edibles, vapes, and extracts.
The changes are part of the company’s cost-cutting measures for fiscal 2023, which also include the divestiture of its Canadian retail operations, organizational restructuring of some corporate functions, and the closure of its Scarborough, Ontario research facility.
Unfortunately, the cost-cutting measures will also result in significant job losses. Canopy Growth intends to close its Hershey Drive facility in Smiths Falls, Ontario and reduce its headcount by approximately 60%, including the 800 positions impacted by today’s announcement. Of these positions, 40% will be impacted immediately.
The company expects these cost reduction initiatives to result in a combined reduction of $140-$160 million in its annual Cost of Goods Sold and Selling, General & Administrative expenses over the next 12 months, bringing its total cost reduction target to $240-$310 million, inclusive of reductions announced in April 2022.