By Market Cap Canopy Growth Closes Greenhouses and Fires Hundreds of Positions
The world's largest cannabis company by market cap shrinks by closing 3 million square feet (300000 m2) of greenhouses. Wednesday afternoon, Canopy Growth has announced plans to close two grow operations in British Columbia, resulting in the layoff of 500 employees.
The company also abandoned its plan to open a greenhouse in Ontario. "Almost 17 months after the creation of the legal adult market, the Canadian leisure market has grown more slowly than expected, creating problems of working capital and profitability throughout the industry," the company said in the statement. “In addition, federal regulations allowing outdoor cultivation were introduced after the Company made significant investments in greenhouse production. "
Canopy Growth ( GSC ) has a more profitable outdoor grow site, the company said. North America's largest cannabis companies have struggled, with operational growth far exceeding the actual development of the cannabis industries. Companies like Canopy Growth have since taken drastic steps to downsize to ensure short and long term profitability.
Site closures in Aldergrove and Delta, British Columbia - which account for more than half of Canopy Growth's growing business in Canada - are expected to result in a pre-tax charge of C $ 700 million to $ 800 million on Canopy Growth's profits during the quarter. it will end on March 31st. The company said it would likely incur other charges as a result of its organizational and strategic review.
Canopy's shares fell nearly 2% in after-hours trading. Andrew Carter, a Stifel analyst who covers Canopy Growth, said he was not surprised by the announcement. "We believe the company has carefully considered its cultural footprint for current and future needs," Carter said in a note to investors. “But with 15 million square feet of licensed cultivation [in Canada] and the option of growing outdoors, the value of indoor production is limited, especially for greenhouse cultivation. "