Canopy Growth, a Canadian cannabis producer, announced it was closing its flagship grow facility in Smiths Falls, Ontario, and cutting 35% of its workforce as part of a shift to a “lean model.” assets” in Canada.
The news comes after it reported a net loss of more than $260 million in its most recent quarter. It also follows Canopy’s withdrawal from the Canadian retail market and the closure of its Scarborough research center. The company says it expects to achieve up to $160 million in savings over the next 12 months.
The restructuring will lead to a significant reduction in production and the workforce, with 800 positions affected immediately. Canopy says it intends to lay off about 60% of its payroll.
Following the closure of Smiths Falls, the company is discontinuing the cultivation of cannabis flower at the Ontario facilities. It will also stop sourcing cannabis flowers from a facility in Mirabel, Quebec, and transition to a third-party sourcing model for beverages, edibles, vapes and cannabis extracts.
“Canopy must achieve profitability to realize our ambition for long-term leadership in the North American cannabis market. We are transforming our Canadian business into a low-asset model and significantly reducing the overall size of our organization. These changes are challenging but necessary to drive our business toward profitability and growth,” said David Klein, CEO of Canopy.
Klein was Canada’s highest-paid CEO in 2020, according to a report released last year by the Canadian Center for Policy Alternatives. His total compensation reached more than $45 million as the company reported a net loss of $1.3 billion in 2022.
In the first quarter of its fiscal 2023, the company reported a loss of $2.1 billion, including $1.7 billion in impairments.
In its 2022 fiscal year report, Klein said the company was moving away from low-cost products in favor of “premium brands” and focusing on expanding its footprint in the United States.
The company launched a US-domiciled holding company, Canopy USA, to “accelerate entry into the US cannabis market” and hold the company’s US investments.
The company has acquired a number of leading American brands, including the manufacturer ofedibles Wana, California-based Jetty Extracts and Acreage Holdings, a multi-state cannabis grower and retailer.
