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Be the first with the news that moves the market- Canopy Growth Corporation (TSX:WEED) has revealed sweeping changes to its global operations as it looks to streamline its business
- Cultivation activities will cease at some Colombian, US and Canadian facilities to match market demand
- The company also plans to exit the South African market entirely, and will sell its assets to a local business
- The decisions are part of a wider effort to lower the company’s cost structure and reduce cash burn
- Canopy Growth Corporation (WEED) is currently down 2.3 per cent to C$20.37 per share, with a market cap of $7.12 billion
Canopy Growth Corporation (TSX:WEED) has revealed sweeping changes to its global operations as it looks to streamline its business.
Since it was founded in 2013, the Ontario-based company has carved a position as one of the largest and most successful cannabis entities in the world.
However, and like many cannabis-focussed companies, a struggling industry has meant that operational adjustments need to be made to meet a changing market.
Included in these changes is the shutdown of its indoor facility in Yorkton, Saskatchewan. It’s hoped that this will further align Canopy Growth’s production levels with current market conditions.
The company said that its other production facilities across the country will more than meet consumer demand in the future.
Similarly, cultivation operations will cease at its facility in Colombia. Rather than producing its own products, Canopy Growth will move to an “asset-light” model, leveraging local suppliers for raw materials.
In addition, a recently announced agreement with Procaps will see to the company’s formulation and encapsulation activities.
Canopy Growth’s US operations will also be trimmed. Farming efforts in Springfield, New York, will be shut down, following excessive hemp production in the 2019 growing season. The company said that it will continue using the over-supply to produce hemp-derived CBD products for the US market.
Most notably, however, is the planned exit from the South African market. No specific details have been given, other than the proposed transfer of all its assets to a local business.
Canopy Growth’s recently appointed CEO, David Klein, said that when he took his position, he committed to conducting a review of the company’s operations in an effort to lower its cost structure and reduce cash burn.
“I believe the changes outlined today are an important step in our continuing efforts to focus the company’s priorities, and will result in a healthier, stronger organization that will continue to be an innovator and leader in this industry.
“I want to sincerely thank the members of the teams affected by these decisions for their contributions in helping build Canopy Growth,” he concluded.
Canopy Growth Corporation (WEED) is currently down 2.3 per cent to C$20.37 per share at 1:31pm EST.
