Neptune Wellness Solutions is the latest business to retreat from Canada’s increasingly competitive cannabis industry.
The Laval, Quebec-based company said in a Wednesday news release it plans to accelerate the divestiture of its cannabis business to focus on areas with greater potential such as consumer products.
The move comes after Neptune racked up almost 300 million Canadian dollars (CA$236 million) in losses in recent years.
The company said it plans to sell its cannabis brands, Mood Ring and PanHash, as well as its Sherbrooke, Quebec, facility.
Neptune’s pullout isn’t the first company to pull out of the Canadian cannabis market.
In 2020, FSD Pharma said it planned to exit the marijuana industry and relinquish Health Canada cannabis licenses held by subsidiary FV Pharma.
Neptune said in its release that it retained Stifel GMP to support the divestiture efforts and the structure was appraised at CA$21 million.
“In order to accelerate its cost savings, the company will focus on winding up its cannabis operations pending a transaction,” according to the release.
Neptune said the planned sales will result in annual cost savings worth $5.8 million and a 50% reduction in its workforce.
As of March 31, 2021 – the latest figures available – Neptune had 127 employees.
“This strategic divestiture greatly simplifies our overall structure, enabling us to hyper-focus on those areas of the business we believe are best positioned for profitability and growth,” CEO Michael Cammarata said.
“Of course, the most difficult part of the Company and Board making this decision is the impact on our workforce. We are committed to working with those employees to ensure they are supported throughout this transition.
“I extend my deepest gratitude to each and every person impacted by this decision and thank them for their hard work and dedication to Neptune throughout their tenure.”
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In 2020, Cammarata was the highest-compensated CEO of a Canadian cannabis company with an overall pay package valued at CA$58.7 million. The package included cash, share and option-based awards.
His 2021 pay was worth CA$10.3 million.
Neptune has lost CA$288 million since 2020.