Cannabis producer Canopy Growth Corp. WEED-T is laying off 250 people, about a 10th of its staff, in a cost-cutting plan to save the company $100-million to $150-million within 12 to 18 months in order to reach profitability.
The layoffs are not tied to a specific facility closing, but rather a reorganization of team structures, said Canopy spokesperson Jennifer White in an e-mail to The Globe and Mail. At the end of March, Canopy employed 3,084 people.
She confirmed the company will retain its primary production facilities in Smiths Falls and Kincardine in Ontario, and Mirabel, Que., and “no production facilities” are affected by the announcement.
Other planned measures include increasing partnerships with contracted manufacturing organizations and small craft cannabis producers, as well as maintaining Canopy’s core production, Ms. White said.
In the company’s fiscal 2022 third quarter, ended Dec. 31, 2021, Canopy reported a $115.5-million net loss, compared with a net loss of $829.3-million in the same quarter a year earlier. Its revenue fell 8 per cent as the falling cost of cannabis continued to drag down earnings across the sector.
The company reported just $161-million in operating expenses, down from $578-million a year earlier.
Of those costs, $117-million was related to selling, general and administrative expenses. Canopy said it plans to decrease this amount by “reducing third-party professional fees and office costs,” saving $70-million to $100-million over the next 12 to 18 months.
Ms. White said these are largely tied to agency costs, including fees paid for marketing, creative, legal consulting and lobbying.
The company said it will make facility improvements and increase “cultivation-related efficiencies” to lower the cost of producing cannabis, saving $30-million to $50-million during the same time frame.
Based on preliminary figures, the company expects to incur between $100-million and $250-million in non-cash impairment charges in its next quarter, which ended March 31, largely driven by goodwill and intangible asset impairments.
Last May, Canopy laid off 75 staff, mostly from its Smiths Falls production facility. The previous year, it cut 220 jobs at five locations across Canada.
In a news release, David Klein, Canopy’s chief executive officer, said necessary changes would ensure the company’s size and scale reflect current market realities.
“To realize profitability and power growth, we are taking critical actions to further evolve Canopy Growth into an agile organization with a clear focus on the areas where we have the greatest potential of success,” Mr. Klein said.
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Irene Galea