Canopy Growth Corp. (TSX: WEED) (Nasdaq: CGC) will cease funding for its BioSteel Sports Nutrition unit. Following this, BioSteel has initiated proceedings under Canada’s Companies’ Creditors Arrangement Act.
In a statement Thursday, Canopy CEO David Klein said that while BioSteel experienced an uptick in revenue, it wasn’t in line with Canopy’s focus on an asset-light cannabis strategy.
“We have repeatedly demonstrated that we will take decisive action to enhance our profitability,” Klein said.
Canopy had been considering strategic options for the BioSteel unit, including its potential sale, as part of its reorganization. The company reported that BioSteel contributed approximately 60% of its first-quarter adjusted EBITDA loss.
With BioSteel entering the bankruptcy protection process, Canopy plans to optimize the value of its assets. Canopy remains a primary creditor and shareholder of BioSteel in Canada.
In addition to divesting Biosteel, Canopy announced that it has reduced its debt by C$349 million since the beginning of July. Additionally, a sale agreement for the Hershey Drive facility is set at C$53 million. Property sales since April 1 have totaled C$155 million, and the company achieved a cost reduction of C$47 million in the first quarter of FY2024.
Canopy signaled cost-cutting changes in February when it announced that it would shutter its Smiths Falls facility, a meaningful pivot after heavily investing in huge cultivation operations and accruing mounds of debt.
Instead, it has been transitioning to third-party sources for cannabis-infused beverages, edibles, vaporizers, and extracts.