In a massive blow to the Canadian cannabis industry, Global Cannabis 50 8th-ranked Canopy Growth (NASDAQ: CGC) announced it is laying off 60% of its workforce and shuttering its cannabis cultivation facility in Smiths Falls, Ontario among other moves to a “light-asset” business plan.
The company’s second restructuring in less than 12 months will eliminates 800 positions, the company said in a statement Thursday. After having spread it wings across Canada as a vertically integrated provider, the announcement included Canopy’s surprise move to a third-party sourcing model for cannabis beverages, edibles, vapes and extracts.
“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” Canopy’s CEO David Klein says in his statement. Canopy estimates it can save as much as $230 million over the next year from the reductions.
Klein pointed a finger at the illegal market for derailing Canada’s cannabis leader’s sales in a market once optimistically projected at $7 billion. Klein estimates that the black market is stealing 40% of all legal cannabis sales.
“Today, there are two very different cannabis markets in Canada. One that’s legal, highly taxed and regulated and one that’s thriving and illicit,” says Klein, echoing the similar complaints of California businesses battling the black market and decrying prohibitive taxes.
Other streamlining efforts include ceasing sourcing flower from one of its primary cultivation facilities, Vert Mirabel, located in Mirabel, Quebec. The generational-run greenhouse currently employs more than 200, jointly owned by Canopy Growth and partner Les Serres Stéphane Bertrand of Mirabel, is also likely to feel the fallout of the cuts.
Once Canada’s top marijuana company with a market value of nearly $20 billion, Canopy now falls behind to Nanaimo, BC-headquartered Tilray Brands, currently ranked 12th on the Global Cannabis 50. According to Fortune, Canopy Growth recorded just $75 million in Q3 ended Dec. 31 and lost S65 million on an adjusted basis, before interest, taxes, depreciation and amortization.