Employees of Canopy Growth (TSX: WEED) (NASDAQ: CGC) got a call from the Grinch today as 200 employees learned they would no longer have a job. Canopy Growth said it would cease operations at the following sites: St. John’s, Newfoundland and Labrador; Fredericton, New Brunswick; Edmonton, Alberta; Bowmanville, Ontario; as well as its outdoor cannabis grow operations in Saskatchewan. The company noted that approximately 220 employees have been impacted as a result of these closures. The stock price fell over 5% on the news and closed at $27.20.
“As part of the end-to-end review of our operations that we outlined during our second-quarter earnings call, we have made the decision to close a number of our production facilities. These actions will be an important step towards achieving our targeted $150 -$200MM of cost savings and accelerating our path to profitability. 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,” said David Klein , CEO, Canopy Growth. “This was a difficult decision but I believe it is the right one. I want to thank all of the employees impacted by this decision for their efforts in helping build Canopy Growth.”
The company said the decisions are the partial outcome of an ongoing end-to-end review designed to improve its margins. The end-to-end review was announced during the company’s second-quarter earnings call and looks at people, process, technology, and infrastructure. The company also said it expects to record estimated total pre-tax charges of approximately $350 -400MM in the third and fourth quarters of Fiscal 2021. The production sites impacted represent approximately 17% of the Company’s enclosed Canadian footprint and 100% of its Canadian outdoor production footprint.
This comes on the news that The Vitamin Shoppe agreed to stock its Martha Stewart CBD products in its stores and make them available through its web site. All told, The Vitamin Shoppe has over 780 stores throughout the U.S.; Martha Stewart CBD goods are available in more than 580.