By: Buz Deliere | February 9, 2023
In a seismic move, Canadian cannabis producer Canopy Growth announced Thursday that it is closing its flagship Smiths Falls facility and reducing roughly one-third of its workforce. This shift to an "asset-light model" in Canada signals major changes for the leading marijuana company.
After announcing a whopping CA$2.6 billion in losses for the first three quarters of 2020, Canopy Growth Corporation revealed its new strategic plan this week to help restore financial stability and bring them back into the black. The company's third quarter alone left them with an incredible net loss of 267 million Canadian dollars (US $200 million).
Canopy Growth Corporation revealed Thursday that it will reduce its workforce by 35%, resulting in 800 layoffs. These cuts come as part of the company's efforts to restructure and become more competitive within an ever-evolving cannabis market. A spokesperson for the company stated that about 300 jobs are immediately affected by the decision.
Cannabis companies across North America are feeling the heat from falling wholesale marijuana prices and economic worries, resulting in hundreds of layoffs. Cash-strapped consumers have forced these firms to close their doors due to decreased spending power. Brands like Jerry Garcia's Handpicked and Kristen Bell's Happy Dance have left the troubled California market.
Last month, Curaleaf Holdings sent shockwaves through the cannabis market by announcing it would close most operations in three western states while also reducing its payroll. This serves as a stark reminder of how difficult times are for marijuana businesses across America and is yet another indication that more pain may be on the horizon.
Canopy has drastically downsized its staff and facilities, announcing a reduction of more than half its “operational footprint” according to a spokesperson. The company will be consolidating cultivation at two purpose-built for cannabis locations in Kelowna and Kincardine as part of the restructuring plan.
Canopy Growth’s executives have made a bold proclamation – they aim to achieve positive EBITDA before March 2024 and are taking significant steps towards it, with initiatives expected to save the company between CA$140 million to $160 million in just one year.
CEO David Klein stated, “Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” he goes on to say, “We are transforming our Canadian business to an asset-light model and significantly reducing the overall size of our organization."
Canopy Growth, the largest cannabis company in Canada, has been rapidly downsizing its production capacity across multiple provinces due to too much overbuilding. This move by the industry leader is sure to have a significant impact on the country's marijuana market.
In a shock move in November 2021, Canopy shocked the cannabis industry by closing down its expansive 23-acre location in Niagara-on-the-Lake. Adding to this unexpected upheaval were two further facilities sold off earlier that year; both had been previously hailed as the world's largest-ever cannabis greenhouses - the properties were sold at a loss also.
On Thursday, Canopy Growth Corporation unveiled its new “transformation” strategy with an aim to move towards third-party sourcing for cannabis beverages, edibles, and vapes. Furthermore, the company announced it will cease sourcing flower from its Mirabel facility in Quebec. These sweeping measures could give a much-needed boost to their business as they look into 2023.
Despite a turbulent year in the cannabis market, larger companies are adapting to survive by scaling down their operations. It will be intriguing to observe how this move impacts smaller businesses and what new opportunities emerge as potential major players of 2023