Canopy Growth Corp (TSX: WEED) (NYSE: CGC) has officially released further details related to the discovered closure of the firms BC Tweed cultivation facilities located in British Columbia. The closure will affect approximately 500 positions at the company, a significant expansion from the assumed 300 positions that were based on company documents.
In addition to the two BC locations, Canopy has said that it will also not be bringing online the third facility at Niagara-On-The-Lake in Ontario like had originally been planned. The two BC facilities, which account for a combined 3 million square feet, are said to no longer be crucial to the firms cultivation footprint. This is a result of outdoor production now being legal, which Canopy has taken advantage of with outdoor operations in Central Saskatchewan. The outdoor crop is now anticipated to be used as Canopy’s primary extraction-bound material.
As a result of the operational closures, Canopy Growth indicated it now intends to take pre-tax charges of approximately $700 – $800 million in the quarter ended March 31, 2020. The charge is also stated to reflect other unspecified changes as a result of its organizational and strategic review.
When I joined Canopy Growth earlier this year, I committed to focusing the business and aligning its resources to meet the needs of our consumers. Today’s decision moves us in this direction, and although the decision to close these facilities was not taken lightly, we know this is a necessary step to ensure that we maintain our leadership position for the long-term. Along with the rest of the management team, I want to sincerely thank the members of the team affected by this decision for their work and commitment to building Canopy Growth.
David Klein, CEO of Canopy Growth
Canopy Growth has not indicated whether it will be selling the facilities or whether its looking to sell the facilities in the near term. The closures are said to be directly related to the recreational markets for cannabis developing slower than initially expected, which has caused working capital and profitability challenges for the company.
Canopy Growth last traded at $23.77 on the TSX.
Information for this briefing was found via Sedar, Global News and Canopy Growth Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
