Canopy Growth Archives - Green Market Report

Kaitlin DomangueKaitlin DomangueAugust 10, 2020
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1min1560

It’s time for your Daily Hit of cannabis financial news for August 10th, 2020.

On the Site

Canopy Growth Still Reporting Elevated Losses

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) reported first-quarter fiscal 2021 net revenue increased 22% to $110 million. The net loss of $128 million was lower than last year’s net loss by $66 million which the company attributed to the higher revenue and lower SG&A expenses.

In Other News

Terra Tech Reports Lower Gross Margins as it Becomes Vertically-Integrated 

Former retail-only Terra Tech reported a Q2 revenue of $3.5 million. This is down 26% from the same time last year. The company cites the combined impact of COVID-19 and civil unrest, forcing them to close two of their dispensaries for the entire month of June. Terra Tech reported a gross margin of 42.1% compared to 51.4%, with a net loss of $18.18 million. 


Debra BorchardtDebra BorchardtAugust 10, 2020
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4min6860

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) reported first-quarter fiscal 2021 net revenue increased 22% to $110 million. The net loss of $128 million was lower than last year’s net loss by $66 million which the company attributed to the higher revenue and lower SG&A expenses.

“We’re proud of our strong first-quarter performance, despite unprecedented volatility and uncertainty in the market and across the globe,” said David Klein, CEO. “We grew our revenue year-over-year and are seeing market share improvement, notably achieving number one market share in cannabis-infused beverages in the Canadian market.  We are implementing a renewed corporate strategy with the appointment of a new leadership team which will focus on delivering quality products to our consumers, positioning our business for continued growth. The proposed retooled Acreage announcement refocuses our entry for the evolving U.S. market, where we are seeing increased momentum.”

The total SG&A expenses declined by 23% versus last year’s first quarter, driven by year-over-year reductions in Sales & Marketing expenses, partially offset by higher General & Administrative (G&A) and Research & Development (“R&D”) expenses. Canopy said that the sales & marketing expenses decline of 25% reflected lower compensation expenses resulting from corporate restructuring actions taken earlier in the year, delayed or canceled marketing activities, and reduced travel-related expenses due to the COVID-19 pandemic. G&A expenses increased 2%, while R&D expenses rose 61% mainly driven by research studies that commenced in Q2 and Q3 2020 and increased activities to support Cannabis 2.0 product development. Share-based compensation expenses decreased 65% over Q1 2020.

“Following our previously announced restructuring actions, we have substantially reduced our expense and cash burn in this quarter in addition to reducing headcount by over 18% since beginning of this calendar year.  Our marketing and R&D investments are being re-allocated to programs with high-return potential in order to drive sales,” added Mike Lee, CFO. “Our gross margins in the quarter came in below our expectations due to under-utilization of our large-scale infrastructure. We’ve already proven we can deliver a 40%-plus gross margin and are confident that we can return to that level as we work toward higher capacity utilization across our facilities as demand for our cannabis products continue to grow. In the meantime, we are focused on further optimizing our operating footprint through a full end-to-end strategy that looks at people, process, technology, and infrastructure that we believe will lead to best in class margins over time.”

The company also stated that cash and short-term Investments were $2.0 billion at June 30, 2020, unchanged from $2.0 billion at March 31, 2020, reflecting the investment of approximately $245 million by an indirect wholly-owned subsidiary of Constellation Brands (NYSE:STZ) to exercise warrants in the Company offset by the EBITDA loss and capital investments.


StaffStaffJuly 6, 2020
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8min10551

Editors Note: This is a guest post.

Cannabis and its derivative products are all the rage right now. State after state legalizes its recreational use and dispensaries all over the country are making loads of money. The medicinal aspects of the plant are also heavily taken advantage of by big pharmaceutical companies, with new, branded drugs being released with cannabis as their primary component. 

Although Canada is at the forefront of the legalization battle, having fully legalized all uses of the plant back in October 2018, the United States is not lagging behind. One of the better examples of this in Nevada, where after the passing of a bill allowing the sales of recreational pot by any licensed dispensary, free delivery of cannabis in Las Vegas drew so many customers in, that many of these businesses were running out of drivers! 

These developments naturally make investors around the world question whether investing in cannabis-related stocks is worthwhile. The weed market is very young, and therefore highly volatile, and therefore susceptible to many ups and downs in the nearest future. It will take an additional couple of years for it to stabilize, which is something you need to keep in mind when planning out your investments

The general trend seems to be that it will continue to grow, as proven by the continuous passing of legislation in countries around the world, liberalizing the restrictions on the stuff. This allows entrepreneurs and investors alike to get creative with their money and come up with exciting new ways to consume and make use of cannabis. 

Experts predict that by 2022, the marijuana market will reach $32 billion — that leaves plenty of room for improvement and growth, making weed stocks a perfectly viable option for investments. You will find the most powerful and stable publicly traded cannabis companies below. 

Canopy Growth Corporation

This Canadian company is a true cannabis giant — back in 2014, it became the first company of its kind to be publicly traded. Back then, it was listed on the Toronto stock exchange and made its way to the NYSE in May 2018. 

Canopy Growth (NYSE:CGC) made the headlines in 2018 when Constellation Brands bought $4 billion worth of their stock. They are an alcohol importer, so you can be sure that there’s a plan of producing branded marijuana-infused beverages in the works. 

Moreover, Canopy was the first Canadian producer to export their dried marijuana to Germany, making it a truly intercontinental corporation. They continue their operations on European soil through a wholly-owned subsidiary that distributes Canopy products to German pharmacies. 

As of recently, Canopy has been aggressively increasing its footprint in the American market, most notably through striking a deal with Acreage Holdings (a US-based major distributor), allowing it to secure a huge market share in the US, by far the largest cannabis market in the world. 

Canopy Growth is by far the most secure option to invest in, as they have proven their global ambitions and increased scope of their operations year after year since its inception back in 2013. 

Tilray 

Similarly to Canopy, Tilray is also one of the largest cannabis-producing corporations in the world. Based in the United States, its scope is even larger than that of Canopy Growth, with Tilray owning subsidiaries all over the globe — they’re exporting to places like Chile and Argentina, but also plenty of European countries, such as Ireland and Switzerland. Tilray has also opened a licensed production facility in Portugal, the only North American company to produce cannabis-based products in the EU. They can be found in pharmacies in most European countries. 

It is also worth noting that while the Asian cannabis market is largely untapped due to extremely strict regulations of the plant in those regions, Tilray has managed to open up limited facilities in South Korea and Japan — as the trend of cannabis laws being liberalized all over the globe continues onto Asia, Tilray will be ready for it, way ahead of other cannabis enterprises. 

If you need any more convincing of Tilray’s might and the influence it wields over the global cannabis industry, there is no better example of it than the fact that its CEO, Brendan Kennedy has become the first-ever marijuana billionaire, with his net worth being estimated at around $2.4 billion. 

The Choice is yours 

Investing large amounts of money into a volatile market should always be done with extreme caution. This is a move that needs to be thought through. Should you invest in one of the big boys, like Tilray and Canopy Growth, or move your money towards a smaller, but more exciting enterprise, such as the various local dispensary chains that are literally popping up like mushrooms after heavy rainfall? 

The choice belongs to you. As for the industry giants, it might be more reasonable to buy Canopy Growth stock, as it is still less developed than Tilray, and their potential is still largely untapped, making it the more exciting option of the two. 

Canadian consumers can buy cannabis online here.

 


Video StaffVideo StaffJune 26, 2020

6min7131

Happy Pride weekend everyone. Celebrate safely. 

Canopy Growth Corporation (NYSE: CGC) and Acreage Holdings, Inc. (OTCQX: ACRGF) stunned markets when the two companies agreed to an unusual deal in 2019. The agreement was that when cannabis was legalized in the U.S., Canopy would buy Acreage. It was called the “triggering event.” A lot has changed since then and now the deal has changed accordingly.  Acreage shareholders will now get an initial up-front payment of $37.5 million in connection with the modification of Canopy Growth’s rights. That’s a big drop from the original price tag of $3.4 billion.  In addition to that CEO Kevin Murphy is resigning from the company.

Aurora Cannabis Inc.  (NYSE: ACB) is the latest cannabis company to destroy the job argument as a reason for legalization. The Canadian cannabis company laid off 25% of Aurora’s SG&A staff, most of those to take place immediately and a roughly 30% reduction in production staff over the next two quarters. The cuts went to the highest levels including a restructuring of the executive leadership team and the recently announced retirement of President Steve Dobler. Aurora said it has initiated a plan to close operations at five facilities over the next two quarters in order to focus production and manufacturing at the Company’s larger scale and highly efficient sites.

Jushi Holdings Inc. (OTCQX: JUSHF) is planning on buying Vireo Health’s (OTC:VREOF) Pennsylvania Medical Solutions, LLC as the company looks to strengthen its position in the state’s market. Jushi will pay Vireo $16.3 million in cash, a $3.8 million seller note, and assume a $17 million facility associated with a long-term lease obligation. The $37 million deal is expected to close by the end of August 20.

GW Pharmaceuticals plc (Nasdaq: GWPH) said that the UK Home Office has reclassified Epidiolex, the company’s cannabidiol medicine as a Schedule 5 drug. A big relief to patients and pharmacists. 

TILT Holdings Inc. (OTCQB: TLLTF) reported Quarterly revenue of $42.4 million, up 27% Quarter over Quarter and 23% over Q1 2019. The company reported a positive net income of $50,925.  

Organigram Holdings Inc.  (NASDAQ: OGI) issued a very brief announcement stating that the company was facing a lawsuit and that it was changing its newly launched Trailer Park Buds brand. Organigram said it wouldn’t comment on the case, which was started in the Court of Queen’s Bench in Alberta. It is a class-action case that seeks damages from many cannabis companies including Organigram. 

A Cease Trade Orders have been issued by one or more securities commissions. 

Alternate Health Corp.  AHG  Ontario Securities Commission 
Champignon Brands Inc.  SHRM  British Columbia Securities Commission 
CIM International Group Inc.  CIM  Ontario Securities Commission 
iAnthus Capital Holdings Inc.  IAN  Ontario Securities Commission 
Ionic Brands Corp.  IONC  Ontario Securities Commission 
Sunniva Inc.  SNN  Ontario Securities Commission and British Columbia Securities Commission 

Debra BorchardtDebra BorchardtJune 25, 2020
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9min16800

Canopy Growth Corporation (NYSE: CGC) and Acreage Holdings, Inc. (OTCQX: ACRGF) stunned markets when the two companies agreed to an unusual deal in 2019. The agreement was that when cannabis was legalized in the U.S., Canopy would buy Acreage. It was called the “triggering event” and was originally valued at $3.4 billion. The price has dropped considerably.

A lot has changed since then and now the deal has changed accordingly.  Acreage shareholders will now get an initial up-front payment of $37.5 million in connection with the modification of Canopy Growth’s rights, including the extension of the term, and give Acreage shareholders the ability to participate in upside potential upon the Triggering Event.

In addition to that CEO Kevin Murphy is resigning from the company.

Deal Changes

These are the major changes to the deal as outlined by the companies:

  • Canopy Growth will pay Acreage shareholders and certain convertible security holders an aggregate of $37.5 million (approximately $0.30 per Existing Share on an as-converted basis), with the final amount to be received by each holder determined based on the number of Existing Shares into which all of the eligible securities are convertible at the close of business on the record date for the distribution.
  • Acreage shareholders’ new Fixed Shares, each of which represents 70% of an Existing Share, will be entitled to receive 0.3048 of a Canopy Growth Share, representing a premium of approximately 120% to the June 24, 2020 closing price of the Existing Shares on the Canadian Securities Exchange.
  • Acreage shareholders will be entitled to participate in the long-term value created by Acreage, and in the U.S. cannabis industry generally, as a result of the Floating Shares which Canopy Growth may acquire in the future upon the occurrence or waiver of the Triggering Event at a price based upon the 30-day volume-weighted average trading price of the Floating Shares on the CSE relative to the trading price of the Canopy Growth Shares on the NYSE at that time, subject to a minimum of $6.41 per Floating Share.
  • There will be a creation of two new classes of shares in the capital of Acreage with each existing Acreage subordinate voting share (an “Existing Share”) being converted into 0.7 of a Fixed Share and 0.3 of a Floating Share (with proportionate adjustments for the existing proportionate voting shares and existing multiple voting shares)

CEO Murphy Out

Mr. Murphy has resigned as CEO but will continue to act as Chairman of the board of directors of Acreage and contribute to the strategic direction of the company. He is listed as owning 10% of the company’s stock. Director Bill Van Faasen, former Chairman, CEO, and President of The Blue Cross Blue Shield of Massachusetts will serve as Acreage’s Interim Chief Executive Officer until a permanent replacement has been identified.

“On behalf of the entire Acreage Board, I sincerely thank Kevin for his passion and commitment to building a leading cannabis enterprise across the United States,” said Douglas Maine, Chair of the Acreage Special Committee. “Kevin is a visionary entrepreneur and positioned Acreage for success in the U.S. cannabis industry. As we move forward with a renewed commitment by Canopy Growth and build upon the vision for the U.S., we are optimistic about the long-term growth prospects for our shareholders.”

“I am excited about this New Agreement and the creation of a pre-eminent and truly global cannabis company upon the occurrence of the Triggering Event. I believe the eventual federal permissibility of cannabis in the United States is inevitable and this New Agreement continues to allow our shareholders to become a part of a leading cannabis company following such changes. Moreover, as the largest shareholder of Acreage, I believe this New Arrangement allows all Acreage shareholders to participate in potential upside to their investments through the fixed exchange component of Canopy Growth stock and importantly the new Floating Shares” said Kevin Murphy, Chair of the Acreage Board.

Canopy Loans Acreage $100 Million

In connection with the New Agreement, Canopy Growth has agreed to loan a wholly-owned subsidiary of Acreage (“Acreage Hempco”), up to $100 million pursuant to a secured debenture.  Canopy Growth will loan Acreage Hempco an initial $50 million on and subject to completion of the New Arrangement.  The remaining $50 million will be subject to the satisfaction of certain conditions by Acreage Hempco. The Debenture will bear interest at a rate of 6.1% per annum.

The United States is going to be a core market for Canopy Growth and this New Agreement solidifies our path forward with Acreage,” said David Klein, Chief Executive Officer of Canopy Growth. “I am excited to bring our relationship with Acreage back to center stage in our U.S. strategy and look forward to a time when the laws in the United States permit us to finalize this transaction as we march toward bringing our exciting beverage products to the US.”

Acreage Tumbled Quickly

Eyes were raised recently when Acreage announced that it agreed to a short term loan with an interest rate of 60%. Those terms rattled shareholders. That type of loan is akin to a payday loan and means the company must have really needed the money badly if it was willing to take those terms. The loan is secured by the company’s cannabis operations in Illinois, New Jersey, and Florida, as well as it’s U.S. intellectual property. If it can pay back the loan, In the event of default, the company is further obligated to pay to Lender an additional fee of $6 million.

Acreage was already selling assets and laying off employees after the company overextended itself in trying to become the largest cannabis company in the country. Acreage said it expects to record a pre-tax, non-cash charge of $80 to $100 million in the quarter ending March 31, 2020.

Canopy Growth’s Troubles

While Acreage has been struggling to right its ship, Canopy isn’t in much better shape. The company announced declining revenues and massive losses for the fourth quarter ending March 31, 2020. The net revenue in the quarter dropped by 13% sequentially to $107 million as the company blamed lower Canadian recreational revenue. Canopy Growth also delivered a staggering net loss of $1.3 billion in the quarter which was attributed to impairment and restructuring charges.


Debra BorchardtDebra BorchardtMay 29, 2020
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5min10280

Canopy Growth Corporation (NYSE: CGC) announced declining revenues and massive losses for the fourth quarter ending March 31, 2020. The net revenue in the quarter dropped by 13% sequentially to $107 million as the company blamed lower Canadian recreational revenue. Canopy Growth also delivered a staggering net loss of $1.3 billion in the quarter which was attributed to impairment and restructuring charges. All numbers are in Canadian dollars.

The stock was falling over 22% in early trading as the company’s GAAP EPS came in at -$3.72 and missed analyst estimates by $3.31.

“Through the COVID-19 pandemic, we have worked hard to ensure the health and well-being of our teams and customers and the continuity of our business.  During this time, our team has rolled out our exciting new cannabis-infused beverages and vape products in Canada and a portfolio of CBD products in the US,” shared CEO David Klein. “True to key priorities that I have outlined for Canopy, we have taken steps to align our capacity with the current market demand and focus our resources against the core markets with the largest and most tangible near-term profit opportunity.”

Guidance Pulled As Company Reboots

Canopy said it will no longer strive to be the first to every market, but strives to the best and become a leading consumer insight and product development company in select priority markets, that matches products and consumer preferences in the cannabis space. The company also said that it expects Fiscal 2021 to be a transition year as it resets its strategic focus, rolls out a new organizational design, and implements a comprehensive operational and supply chain productivity program. Canopy has withdrawn its previously communicated milestones for achieving positive Adjusted EBITDA and Net Income.

Fiscal 2020 Results

The company reported revenue of $398 million for the fiscal year 2020, an increase of 76% over 2019. Unfortunately, the total operating expenses for 2020 were $1.6 billion and the total operating loss for the year was $1.6 billion. The net loss for the year was $1.3 billion.

The basic and diluted loss per share was -$3.80 which was much higher than 2019’s net loss per share of -$2.76.

The company began the year with $2.4 billion in cash and cash equivalents. By the end of 2020, the cash was run down to $1.3 billion. During the last quarter, the company’s free cash flow was a negative $304,725.

New Strategy

The company outlined its new strategy in an earnings statement as follows:

  • Becoming a relentlessly consumer-centric organization by building world-class consumer insights and analytics, coupled with focused, leading-edge R&D and innovation to produce a differentiated product portfolio that will delight consumers. The Company will bring these products to the hands of consumers through best-in-class sales execution;
  • Markets and product categories with the highest and most tangible profit opportunities in the near term. Core markets will be Canada, the US, and Germany with a focus on recreational and medical. To capture future opportunities in emerging markets and categories outside the core, Canopy Growth will deploy an asset-light approach;
  • Driving quality in all aspects of our operation and be positioned to deliver the right product at the right time at the right price from the right facility; and
  • Continuing to lead the industry and set industry standards. This includes spearheading the next phase of the cannabis industry evolution and shaping how the industry evolves. The Company will continue to give back to neighbors and communities through its Grow Good Together initiatives.

Klein added, “I am excited to implement our strategy reset and organization redesign over the course of fiscal 2021.  We have a renewed strategic focus and a clear change agenda that is already underway. We are building what we believe is the best cannabis company in the world by putting the consumer at the heart of everything we do and are re-aligning our organization to be faster and more agile.”


Julie AitchesonJulie AitchesonApril 30, 2020
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3min4940

April 29th was a challenging day for major marijuana producer, Canopy Growth. In a statement to the Canadian press, Canopy Growth Corporation announced its most recent round of cuts, which saw 200 staff members laid off from Canadian, U.S., and U.K. offices. This brings Canopy Growth’s current layoff total to 1,000 employees, including Covid-19 furloughs. According to reporting by Canadian news outlet OttawaMatters.com, which was present for the briefing, Chief Executive David Klein framed the cuts as Canopy Growth’s shift in focus from being first to being best. This, after a mid-April shake-up in which the company shed 85 full-time workers and closed some facilities. The lay-offs were announced during a group Zoom call, which Kate Dingvall’s reporting for Forbes Magazine revealed lasted only two minutes.

Canopy Growth, which became the first publicly traded cannabis company in North America in April 2014, has built a variety of brands over the years, including Tweed, Spectrum Therapeutics, DNA Genetics, and Maitri. The company struggled to realize a profit due to several factors, including a glut of hemp, slower-than-anticipated development in the Canadian market, changing regulations, and fluctuating demand. The decision to downsize personnel and operations to focus on products that are proven earners with proven demand is Canopy Growth’s latest viability strategy. 

This strategy includes closing two of the company’s largest greenhouses, both in British Columbia, as well as restructuring global operations in Africa, South America, and beyond. Plans for opening a new greenhouse in Ontario were also scrapped, as Canopy shifts the focus of their growing operations from greenhouses to outdoor sites, which are less costly to establish and manage. (These were not permitted by federal regulations until after the company had already invested heavily in greenhouse facilities). Billed as the world’s largest marijuana company, these cutbacks will hardly bump Canopy Growth down to bush league status, but the restructuring of this industry heavyweight is still big news, and will likely have a sizable impact on the cannabis market moving forward.


Debra BorchardtDebra BorchardtMarch 17, 2020
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4min5610

It seems cannabis isn’t as recession-proof as originally thought. While the world hasn’t officially gone into a recession, the cannabis industry has consistently stated it would thrive in downtimes because consumers would continue to make purchases. However, no one ever thought a pandemic would close the doors entirely.

That has changed with the news that Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) has made the decision to temporarily close all corporate-owned Tokyo Smoke and Tweed retail locations across Canada, effective at 5:00 p.m. local time today, March 17.

“We have a responsibility to our employees, their families, and our communities to do our part to “flatten the curve” by limiting social interactions. For us, that means shifting our focus from retail to e-commerce,” said David Klein, CEO, Canopy Growth. “This is a big decision but it was also an easy one to make – our retail teams are public-facing and have been serving an above-average volume of transactions in recent days. Given the current situation, it is in the best interest of our teams and our communities to close these busy hubs until we are confident we can operate our stores in the best interest of public health.”

Canopy Growth isn’t closing sales entirely. The company said it would continue providing access to their desired cannabis products and prescribed medication. Canopy has established a fully supported e-commerce platform available to recreational and medical customers across the country to provide business continuity for people seeking our products.

The decision affects the 23 corporately-owned stores in NewfoundlandSaskatchewan, and Manitoba as well as the Tweed Visitor Centre in Smiths Falls, ON. Patients will be able to continue purchasing medical cannabis through Spectrum Therapeutics. Adult consumers within Manitoba and Saskatchewan are able to purchase Canopy Growth products through Tweed and Tokyo Smoke e-commerce platforms, all other provinces and territories will be supported through government-run online retail.

 

 


Debra BorchardtDebra BorchardtMarch 11, 2020
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4min6060

 TerrAscend Corp. (CSE:TER)(OTCQX: TRSSF) announced that its wholly-owned subsidiary  TerrAscend Canada Inc. has entered into a loan financing arrangement with Canopy Growth Corporation (TSX:WEED)(NYSE:CGC) in the amount of C$80.5 million in the form of a secured debenture.  In connection with the funding of the Loan, TerrAscend has issued 17,808,975 common share purchase warrants to Canopy Growth.

The net proceeds are expected to be used by TerrAscend Canada for general corporate purposes and the funding of its Canadian operations, its Arise Bioscience U.S. hemp division, international expansion and the repayment of indebtedness. The company can’t use any of the money in the U.S.

TerrAscend has proven its ability to thrive in the global cannabis industry and this loan is a strong signal that Canopy Growth is confident in their ability to execute over the long term,” said David Klein, CEO, Canopy Growth. “We are encouraged by TerrAscend’s strong performance and we view the team’s experience as an important contributor to its continued success.”

Canopy Growth initially invested in TerrAscend way back in November 2017. TerrAscend has achieved considerable milestones since Canopy Growth initially invested, including becoming the first cannabis company licensed for sales in Canadathe United States, and Europe.  Additionally, TerrAscend has expanded its capabilities and portfolio to include domestic and international cultivation, processing and distribution facilities; a growing retail footprint; and best-in-class brands, such as The Apothecarium and Ilera.

“We are pleased to receive this loan from Canopy Growth as we enter the next stage of TerrAscend’s growth and expansion,” said Jason Ackerman, Executive Chairman, and Interim CEO. “The Canopy Growth team recognizes our operational and management expertise, and this financing allows us to continue to fund and execute on our Canadian, U.S. hemp and international businesses while remaining focused on operations with high barriers to entry. We look forward to continuing to work with Canopy Growth as new opportunities emerge and the regulatory landscape evolves.”

Transaction Overview

The Debenture will bear interest at a rate of 6.10% per annum and will mature on March 10, 2030 or such earlier date in accordance with the terms of the Debenture and all interest payments made pursuant to the Debenture are payable in cash by TerrAscend Canada. The Debenture is secured by the assets of TerrAscend Canada, is not convertible and is not guaranteed by TerrAscend.


Debra BorchardtDebra BorchardtMarch 4, 2020
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3min18761

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) said that it plans to close two facilities in Aldergrove and Delta, British Columbia, which will result in the loss of approximately 500 jobs. Also, the company said it no longer plans to bring the third greenhouse online in Niagara-on-the-Lake, Ontario.

The bad news continued for the company as Canopy also said it would take estimated pre-tax charges of approximately $700-800 million in the quarter ending March 31, 2020, as a result of the announcement and additional changes related to its organizational and strategic review.

“When I joined Canopy Growth earlier this year, I committed to focusing the business and aligning its resources to meet the needs of our consumers,” shared Canopy Growth CEO, David Klein. “Today’s decision moves us in this direction, and although the decision to close these facilities was not taken lightly, we know this is a necessary step to ensure that we maintain our leadership position for the long-term. Along with the rest of the management team, I want to sincerely thank the members of the team affected by this decision for their work and commitment to building Canopy Growth.

The company said in a statement that the greenhouses in B.C. account for approximately 3 million square feet of licensed production space and were put into commission, beginning in February 2018, after a period of phased retrofitting to help Canopy Growth scale up to supply the new Canadian adult-use market. Nearly 17 months after the creation of the legal adult-use market, the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry.

Additionally, federal regulations permitting outdoor cultivation were introduced after the company made significant investments in greenhouse production. Canopy said it now operates an outdoor production site to allow for more cost-effective cultivation, which will play an important role in meeting demand on certain products that rely on cannabis extracts.

At the beginning of cannabis legalization in the country, companies were one-upping each other as to how much indoor growing space they could build. Seemingly with no regard to how much could be consumed, grow facilities were created at great expense using the latest lighting equipment and growing software. No doubt, the second-hand market will now be flooded with bargain rate used equipment.

 



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