Staff work in a marijuana grow room that can be viewed by at the new visitors centre at Canopy Growth's Tweed facility in Smiths Falls, Ont., Thursday, Aug. 23, 2018. Canopy Growth Corp. says it is ceasing operating at five facilities across the country and laying off 220 workers. THE CANADIAN PRESS/Sean Kilpatrick

Canopy Growth to close five facilities across Canada, lay off 220 workers

TORONTO — Canopy Growth Corp. will cease operations at five facilities across the country and lay off more than 200 workers — the latest in a series of dramatic cuts the cannabis company and several others have made this year.

Smiths Falls, Ont.-based Canopy said Wednesday that it will end operations at sites in St. John’s, Fredericton, Edmonton, Bowmanville, Ont. and at an outdoor grow facility in Saskatchewan.

The closures will impact 220 employees, but save the company between $150 million and $200 million and accelerate its path to profitability, Canopy chief executive David Klein said in a release.

“This was a difficult decision, but I believe it is the right one,” he said.

“I want to thank all of the employees impacted by this decision for their efforts in helping build Canopy Growth.”

Canopy’s cuts have come in a year in which many cannabis companies, including competitors Aurora Inc. and Tilray Inc., have announced mass layoffs, facility closures and multimillion-dollar writedowns.

The COVID-19 pandemic only exacerbated matters by causing the temporary closure of cannabis stores in virus hot spots and forcing companies to shell out for masks, hand sanitizer, Plexiglas barriers and other protective measures.

Amid the pandemic, Klein took a dive into Canopy’s finances and rethought its first-to-every-market strategy.

He laid off at least 800 staff by May, and made additional cuts throughout the summer and fall.

He also announced the company would take up to $800 million in writedowns, a total he added to on Wednesday when he said Canopy will record pre-tax charges of between $350 million and $400 million in the third and fourth quarters of its fiscal 2021.

The new cuts will impact about 17 per cent of the company’s enclosed facilities in Canada and 100 per cent of its outdoor sites, which can produce cannabis at much lower prices than indoor ones.

Canopy first got into outdoor growing last year with a test crop in Saskatchewan, but returned to the method this year with hopes of using its crop on edibles, cannabis beverages and vaporizer pens.

Adam Greenblatt, a former senior communications adviser with Canopy, previously extolled the virtues of outdoor growing, saying it slashes electricity bills and reduces labour costs.

With the Saskatchewan site closing, Klein said, “We are confident that our remaining sites will be able to produce the quantity and quality of cannabis required to meet current and future demand.”

His remarks pushed Canopy’s stock down 4.6 per cent or $1.71 to reach $35.18 in afternoon trading on the Toronto Stock Exchange.

Earlier this year, competitor Aurora also ceased operations at about six facilities in Saskatchewan, Ontario, Alberta and Quebec and cut at least 1,200 workers.

Tilray shed at least 10 per cent of its workforce and Sundial Growers and Zenabis Global Inc. also faced reductions.

The cuts have come as Canada is still grappling with how to eliminate the illicit market and companies are trying to entice reluctant consumers and build loyalty with new categories of edibles like beverages.

But just as Canopy was announcing its cuts, its global head of beverages posted on LinkedIn that he is leaving the company and heading to Google Canada’s marketing team.

Andrew Rapsey wrote, “I’m incredibly grateful for the teammates at Canopy Growth Corporation and excited to see how the drinks business evolves in the next six to 12 months.”

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