Canadian cannabis company Canopy Growth on Thursday announced staff reductions of about 60%, including 800 positions, of which 40% were cut immediately. Canopy said it also plans to shut down its Hershey Drive facility in Smith Falls, Ontario.
The moves are part of a cost reduction program that will save the firm between $140 million to $160 million over the next year.
In a press release, CEO Dave Klein said Canopy was transitioning to an “asset-light model and significantly reducing the overall size” of the organization.
“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership. … These changes are difficult but necessary to drive our business to profitability and growth.” — Klein in a statement
The company said the transition to the asset-light model includes third-party sourcing for cannabis beverages, edibles, vapes, and extracts.
In a statement, CFO Judy Hong described the plan as a “right-sizing” of its Canadian business which is “expected to significantly reduce” Canopy’s cash costs.
“Canopy is firmly on the path to deliver at least quarterly breakeven adjusted EBITDA in our Canadian cannabis business in fiscal 2024,” she said, “even at current revenue run-rate.”
Canopy indicated that the company’s net revenues declined 28% in the third quarter of the year versus the third quarter of last year. The decrease, the company said, is “primarily attributable” to increased competition in Canada’s adult-use cannabis market, the divestiture of C3 Cannabinoid Compound Company GmbH, a decline in its U.S. CBD business, and “softer performance” from Storz & Bickel and This Works.
“When adjusting for both the impact of the divestiture of C3 and our Canadian retail business, revenues for the period decreased 23% in Q3 FY2023 versus Q3 FY2022,” Canopy said.
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