Canopy Growth announced that it is exiting cannabis flower cultivation in the Company's Smiths Falls, Ontario facility, ceasing the sourcing of cannabis flower from the Mirabel, Quebec facility, and moving to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts.
The changes come in addition to multiple cost reduction activities within FY2023, including the divestiture of Canopy Growth's Canadian retail operations, the organizational restructuring of certain corporate functions, and the closure of the Scarborough, Ontario, research facility.
As a result of the cost reduction initiatives undertaken in fiscal 2023, the Company intends to close its 1 Hershey Drive facility in Smiths Falls, Ontario, in addition to reducing headcount across the business by approximately 60%, including 800 positions impacted by the changes announced, of which 40% are impacted immediately.
Management expects these cost reduction initiatives will reduce the annual Cost of Goods Sold (COGS) and Selling, General & Administrative (SG&A) expenses by a combined $140-$160 million over the next 12 months, bringing the total cost reduction target to $240-$310 million inclusive of the reductions announced in April 2022.
"Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership. We are transforming our Canadian business to an asset-light model and significantly reducing the overall size of our organization. These changes are difficult but necessary to drive our business to profitability and growth," said
David Klein, Chief Executive Officer
"The right-sizing of our Canadian business is expected to significantly reduce our cash costs. Canopy is firmly on the path to deliver at least quarterly breakeven adjusted EBITDA in our Canadian cannabis business in Fiscal 2024, even at current revenue run-rate," said
Judy Hong, Chief Financial Officer