UPDATE: Former CEO and chairman of Canopy Growth Corporation Bruce Linton weighs in on company’s latest news

Canopy Growth Corporation, the Smiths Falls-based cannabis company, announced on Thursday, Feb. 9 it will layoff 800 workers, or 35 per cent of the workforce.

Forty per cent of those layoffs are effective immediately while the remainder will take place over the next several months. 

On top of the layoffs, the company also intends to close its 1 Hershey Drive facility in Smiths Falls, the former Hershey Factory.

Canopy was founded in 2013 and recently received a $5 billion investment from Constellation Brands, the massive alcohol company.
 
“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” said chief executive officer (CEO) David Klein in a news release issued on Thursday, Feb. 9. “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.”

The company said it is transitioning to an asset-light model in Canada by exiting cannabis flower cultivation in Smiths Falls, ceasing the sourcing of cannabis flower from the Mirabel, Québec facility, and moving to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts.

The company expects these cost reduction initiatives will reduce annual expenses by a combined $140-$160-million over the next 12 months.

“It was a bit of a gut punch,” said former CEO and chairman of Canopy Growth Corporation Bruce Linton about the recent news regarding layoffs and changes to the company on The Sam Laprade Show on Feb. 9. “The cannabis sector in Canada in the last four years has gone from $1.4 billion in total sales to 4 billion in total sales. As for Canopy, every three months in the last three years, they have sold less cannabis than before and is seeing declining sales.”

Canopy reported on Thursday its net loss amounted to $266.7 million or 54 cents per diluted share for the quarter ended Dec. 31. The result compared with a net loss of $115.5 million or 28 cents per diluted share in the same quarter a year earlier.

Canopy said the larger loss was driven primarily by non-cash fair value changes and an increase in asset impairment and restructuring costs.

Net revenue for what was the third quarter of the company’s financial year totalled $101.2 million, down from $141.0 million a year earlier.

One Hershey, which has long been Canopy’s headquarters, was the company’s main site for flower and edibles production, but also housed office space.

“Discipline is only part of the equation,” added Linton. “If you are not innovating and dominating growth, I don't know if you can ever save enough to catch with declining sales.”

Linton wished he was never fired from the company he helped build, “but who knows, some times you get to buy things back at pennies at a dollar.”

With files from The Canadian Press 

Listen to the full interview with Bruce Linton below: