Canopy Growth Corporation announced a series of global operational changes designed to further optimize production, better align supply and demand, and improve efficiencies in its global operations. As part of its ongoing strategic review of the business, the Company announced today the following changes:
- Africa: Canopy Growth has entered into an agreement to exit its operations in South Africa and Lesotho, targeting a transfer of ownership of all of its African operations to a local business. The Company expects to close the transaction in the coming weeks.
- Canada: Canopy Growth will shut down its indoor facility in Yorkton, Saskatchewan, to further align production in Canada with market conditions. The Company is confident its production capacity in Canada will meet consumer demand into the future.
- Latin America: Canopy Growth will cease operations at its cultivation facility in Colombia, moving to an asset-light model that leverages local suppliers for raw materials and Procaps for formulation and encapsulation activities as outlined in the previously announced agreement between the two companies. These activities will support the position of Colombia as the Company’s LATAM production hub and the ongoing development of its cannabis industry.
- United States: Canopy Growth will cease its farming operations in Springfield, New York, due to an abundance of hemp produced in the 2019 growing season. The Company will continue using this supply to produce hemp-derived CBD products for the US market.
“When I arrived at Canopy Growth in January, I committed to conducting a strategic review in order to lower our cost structure and reduce our cash burn,” said David Klein, CEO, Canopy Growth. “I believe the changes outlined today are an important step in our continuing efforts to focus the Company’s priorities, and will result in a healthier, stronger organization that will continue to be an innovator and leader in this industry. I want to sincerely thank the members of the teams affected by these decisions for their contributions in helping build Canopy Growth.”
The Company continues to expect, based upon information currently available to management, to record estimated pre-tax charges of approximately C$700-800MM in the quarter ending March 31, 2020. This relates to this announcement and previous announcements, as well as any additional changes made during the organizational and strategic review. The organizational changes announced today include a headcount reduction of approximately 85 full-time positions.
All figures reported above with respect to the quarter ending March 31, 2020 are preliminary and are unaudited and subject to change and adjustment as the Company prepares its consolidated financial statements for the year ending March 31, 2020. Accordingly, investors are cautioned not to place undue reliance on the foregoing information. The Company does not intend to provide preliminary results in the future. The preliminary results provided in this news release constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation, are based on several assumptions and are subject to a number of risks and uncertainties. Actual results may differ materially. See “Notice Regarding Forward Looking Statements”.