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Canopy Growth Shuts Down Two Greenhouses and Lays Off 500 Staff

By Leo Bear-McGuinness

Published: Mar 06, 2020   
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One of the world’s biggest cannabis producers just shrank in size. Canopy Growth announced this week that it plans to close two of its cultivation facilities in British Columbia, Canada – a decision that will slash about 500 jobs.

The Canadian cannabis giant also halted its plans to open a third greenhouse in Niagara-on-the-Lake, Ontario.

Cannabis and glass houses

The two closing greenhouses in Aldergrove and Delta, British Columbia, take up approximately three million square feet of production space and account for more than half of Canopy Growth's cultivation operations in Canada. Their termination is expected to result in a loss of C$700-C$800 million (pre-tax charge) in the quarter ending March 31.

“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,” David Klein, Canopy Growth CEO, said in a statement. “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.”

Canopy’s announcement is the latest in a recent series of downsizing decisions from the North American cannabis industry, which has struggled with high financial expectations and minimal retail roll-outs. In recent months, other leading cannabis companies, such as Aurora Cannabis, Tilray Inc., and MedMen Enterprises, have announced layoffs.

Why are cannabis businesses struggling?

Despite enthusiasm from many businesses and consumers, most new cannabis markets have developed at a far slower rate than anticipated. Many analysts have partly blamed this on the slow roll-out of retail stores in certain states and provinces.

“This was always going to be a very difficult challenge. You're essentially setting up a multibillion-dollar market from scratch,” Steve Rolles, a senior policy analyst at Transform Drugs Policy Foundation, told Analytical Cannabis last year.

“A lot of people – if they don't have immediate access to retail stores – they're going to stay with their existing dealers. Why would they shift? Especially given the fact that legal cannabis is more expensive than illegal cannabis.”

Based on self-reporting data from the third quarter of 2019, Statistics Canada calculated that the average cost of a gram of legal cannabis was $10.23, compared to $5.59 for illegal cannabis.

Still, there’s hope that with more time and retail outlets, fledgling markets like Canada’s can flourish. Colorado, a region that legalized recreational cannabis back in 2014, raked in $1.75 billion last year in cannabis sales.

Leo Bear-McGuinness

Science Writer & Editor

Leo joined Analytical Cannabis in 2019. From research to regulations and analysis to agriculture, his writing covers all the need-to-know news for the cannabis industry. He holds a Bachelor's in Biology from Newcastle University and a Master's in Science Communication from the University of Edinburgh.


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