Canopy Growth has unveiled what it calls a “production optimization plan” for its operations in Canada, which includes the closure of two greenhouse facilities and the elimination of roughly 500 employees.
“Although difficult, [the] decision was made in order to align Canopy Growth’s supply with consumer demand and improve production efficiencies over time,” CEO David Klein told Cannabis Business Times in an emailed statement.
Canopy plans to shutter its greenhouses in Aldergrove and Delta, British Columbia, which make up roughly 3 million square feet of licensed production space, and the company no longer plans to open a third greenhouse in Niagara-on-the-Lake, Ontario, according to a March 4 press release.
“Nearly 17 months after the creation of the legal adult-use market, the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry,” Klein said. “Additionally, federal regulations permitting outdoor cultivation were introduced after the company made significant investments in greenhouse production. The company now operates an outdoor production site to allow for more cost-effective cultivation, which will play an increasingly important role in meeting demand on certain products that rely on cannabis extracts. Following a strategic review of production capacity and forecasted demand, the company announced … that these facilities are no longer essential to its cultivation footprint.”
The capital markets have “bombarded” the industry in Canada, said Deepak Anand, director of Canadians for Fair Access to Medical Marijuana and vice president of NORML Canada.
It took a while for investors to realize that they should ask the same detailed questions as they do in other industries about what they should do with their money before proceeding with capital raises, said Anand, who is also co-founder and CEO of Materia Ventures and serves on the board of Valens GroWorks. Now they’re closely watching the