Hexo closing Belleville cannabis facility, laying off another 230 workers

Struggling Canadian cannabis producer Hexo Corp. is closing its Belleville facility and transitioning its operations to other sites as part of a “strategic plan” to become cash-flow positive from operations.

Hexo said approximately 230 employees will be affected by the decision.

However, the company says The Truss Beverage Co. – the company’s venture with Molson Canada – will not be impacted by the move and will continue to operate out of the Belleville facility.

“After an extensive review of site capabilities, we have identified this operational closure and transition as an opportunity to further optimize our network,” Hexo’s acting chief operating officer, Charlie Bowman, said in a statement.

“Our decision is designed to leverage other sites with available infrastructure and capabilities to improve production outputs while significantly reducing costs across our entire network. This is a critical next step for HEXO as we continue to make strides towards becoming cash flow positive from operations.”

Hexo plans to offer career counselling and other transitional services to impacted workers.

The company has been closing facilities and laying off hundreds of people after accumulating massive losses.

Hexo has lost 1.6 billion Canadian dollars ($1.3 billion) since 2016.

Late last year, Hexo said it was shutting down three facilities and laying off staff as part of an integration plan after an acquisition spree

Those decommissioned facilities included:

  • Kirkland Lake, Ontario, effective Jan. 31, 2022.
  • Brantford, Ontario, effective Jan. 31, 2022.
  • Stellarton, Nova Scotia, effective Feb. 28, 2022.

Roughly 155 people lost their jobs in that round of layoffs.

The facility in Belleville, Ontario, had been the company’s centralized processing, manufacturing and distribution center and consisted of 932,190 square feet of leased commercial space.

It acted as the main production facility for processing, extraction and packaging as well as the manufacturing of cannabis derivative products.

Truss Beverage operates on roughly 183,600 square feet of subleased space under its own license at the facility, according to regulatory filings.

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Hexo and its subsidiaries had 1,277 employees as of July 31, 2021.

Hexo held 9.6% of Canada’s market share in the January-March period, according to a recent report by New York-based investment banking firm Cantor Fitzgerald.

That was down from 10.7% in the final quarter of last year and 12.1% in the quarter previous to that.

The Belleville facility is owned by Belleville Complex, which is owned by Olegna Holdings – a company affiliated with a Hexo director, according to a regulatory filing.

In January 2022, Hexo sold its 25% interest in Belleville Complex to Olegna for CA$10.1 million.

The company’s shares trade as HEXO on the Nasdaq and Toronto Stock Exchange.

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.