Canopy Growth Corp., the Canadian cannabis producer backed by Constellation Brands Inc., will shut a major facility in Ontario and cut 800 jobs as it accelerates efforts to end years of losses.
(Bloomberg) — Canopy Growth Corp., the Canadian cannabis producer backed by Constellation Brands Inc., will shut a major facility in Ontario and cut 800 jobs as it accelerates efforts to end years of losses.
The company will move to an “asset-light” model in Canada, sourcing many its products from outside parties. The changes mean the end of Canopy’s cannabis cultivation facility in Smiths Falls, Ontario. Headcount across the business will fall by 60%, the company said in a statement Thursday.
Shares fell as much as 10% before paring losses to trade 6.5% lower at 9:38 a.m. in Toronto.
It’s a massive shakeup for a business that was once the standard-bearer for Canada’s pot sector after Prime Minister Justin Trudeau’s government legalized the use of recreational marijuana in 2018. That same year, Constellation, the marketer of Corona beer and Robert Mondavi wines, struck a multibillion-dollar deal that gave it a 38% stake in the cannabis firm.
Canopy was Canada’s most valuable marijuana company — now it’s second to Tilray Inc. — and at one point its stock market value rose to nearly C$20 billion ($14.9 billion). But business results have fallen far short of expectations and it has never been able to fully realize Constellation’s high hopes for pot-infused beverages.
Read More: With Hershey Gone, Canadian Town Embraces Mantle as Pot Capital
The company recorded just C$101 million in revenue for the fiscal third quarter ended Dec. 31. and lost $88 million on an adjusted basis, before interest, taxes, depreciation and amortization.
“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” Chief Executive Officer David Klein said in the statement.
Many of the job cuts will happen right away. The measure will save an estimated C$140 million to C$160 million in the cost of goods and administrative expenses over the next year, putting Canopy’s Canadian business on a path to breaking even on an adjusted Ebidta basis in fiscal 2024, Chief Financial Officer Judy Hong said.
(Adds shares in third paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.