Canopy Growth’s latest efforts to pare down its global cannabis operations include closing a US hemp farm and exiting Africa, the company announced Thursday.
Much like other larger North American cannabis firms whose growth far outpaced that of the market they served, Canopy Growth (CGC) is shedding operations to drastically cut costs and save cash.
Last month, that meant shuttering 3 million square feet of greenhouses and laying off 500 employees.
Now, the world’s largest cannabis company by market cap has exited Africa; plans to close an indoor facility in Saskatchewan; will shut down a 1,000-acre hemp farm in Springfield, New York; and will scale back its operations in Colombia. The latest moves result in the loss of 85 full-time employees, five of whom worked at the US hemp farm.
“We have made the difficult but necessary decision to close our Waterpoint Hemp Farm based in Springfield, New York,” a Canopy Growth spokesperson wrote in an email to CNN Business. “Like many other growers in the state, Waterpoint Hemp Farm produced an abundance of hemp in 2019, which does not commensurate with current market demand or the regulatory delays surrounding hemp extracts.”
The closure does not affect Canopy Growth’s plans for a hemp industrial park in Kirkwood, New York, the Canopy Growth spokesperson said. Heralded by lawmakers such as New York Senator Chuck Schumer, the site has been touted as a $150 million investment with the promise of hundreds of new jobs.
Canopy Growth’s plans for the site include the processing and extraction of cannabis compounds such as cannabinoids from hemp. The company also hopes to attract other hemp-related entities focused on utilizing other aspects of the crop, including seeds and fibers.
Canopy Growth did appear to be moving forward on the hemp production facilities, albeit at a smaller scale, Gordon Kniffen, Kirkwood’s town supervisor, said to CNN Business. Kniffen said he has not been in contact with Canopy Growth for several weeks.
“When I arrived at Canopy Growth in January, I committed to conducting a strategic review in order to optimize our cost structure and reduce our cash burn,” said CEO David Klein, a former executive with Constellation Brands (STZ), Canopy Growth’s largest investor. “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.”
Canopy Growth still expects to incur a pre-tax charge related to the strategic review of between $700 million and $800 million for the quarter that ended March 31.