Canadian cannabis producer Canopy Growth slashed approximately 8% of its workforce Tuesday as part of sweeping changes across the company designed to help stem recent losses and nudge the struggling company to profitability, MJBizDaily has learned.
The latest round of layoffs amounts to 245 people, according to the company, and comes as Canopy struggles with falling sales in Canada. The company has yet to turn a profit.
In a news release late Tuesday, Canopy acknowledged the reduced head count and said it expects the adjustments to generate up to 150 million Canadian dollars ($117 million) in savings in 12 to 18 months.
The Smiths Falls, Ontario-based company also warned the latest measures would result in noncash charges worth CA$250 million to CA$300 million in the fourth quarter of this year, mostly stemming from write-downs of excess inventory.
In addition, Canopy expects to incur between CA$100 and CA$250 million in noncash impairment charges, driven by goodwill and intangible asset impairments.
The newest layoffs mean roughly 1,600 people at Canopy have lost or left their jobs since 2020, David Klein’s inaugural year as chief executive.
According to a recent research note by New York-based financial services firm Cantor Fitzgerald, Canopy’s market share in the January-March quarter fell to just 7% from more than 11% one year ago, citing data from analytics company Hifyre.
The note said Canopy’s recreational cannabis sales tumbled 23% in the markets tracked by Hifyre versus the October-December quarter.
The latest job cuts come months after Canopy announced the planned closure of one of its flagship cultivation facilities, a sprawling 23-acre property in Niagara-on-the-Lake, Ontario, late last year.
That move also resulted in dozens of job losses.
The latest cuts come on top of previous cost-cutting worth CA$150 million to CA$200 million, Canopy said, most of which the company has achieved.
“As a result of these challenging but necessary changes to the organizational structure, dedicated team members will be impacted as the company operates with a reduced headcount moving forward,” Canopy said in the release, issued late Tuesday.
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“To realize profitability and power growth, we are taking critical actions to further evolve Canopy Growth into an agile organization with a clear focus on the areas where we have the greatest potential of success,” Klein said in the statement.
“These necessary changes are being implemented to ensure the size and scale of our operations reflect current market realities and will support the long-term sustainability of our company.”
As part of the strategic review, Canopy said it will:
- Reduce the cost of goods sold (COGS) in the Canadian cannabis business by lowering per-gram cultivation costs via increased efficiencies.
- Implement a flexible manufacturing platform inclusive of contract manufacturing for some of its products.
- Align selling, general and administrative costs (SG&A) with short-term business expectations by reducing third-party professional fees and office expenses.
“The savings and operational efficiencies generated through these additional steps reinforce our commitment to driving Canopy to profitability,” newly appointed Chief Financial Officer Judy Hong said in the release.
“Achieving profitability in our Canadian business is critical to the success of our Company and will ensure we can continue investing in our key strategic growth areas including US THC to build significant long-term value.”
Canopy’s aggregate net losses since 2015 total approximately 3.2 billion Canadian dollars ($2.5 billion).
In March, Canopy was deleted from the S&P/TSX 60 Index as part of a quarterly review.
The company also said it plans property, plant and equipment impairments, but it did not specify which facilities would be targeted.
Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq exchange.
Matt Lamers can be reached at email@example.com.