The company will cease sourcing flower from its Mirabel, Quebec facility and consolidate cultivation at existing facilities in Kincardine, Ontario and Kelowna, British Columbia. Canopy Growth will instead opt for a “third-party sourcing model” for cannabis edibles, beverages, extracts and vapes. Canopy Growth will also close its Scarborough, Ontario research facility.
The company said these moves are expected to save $140-$160 million over the next year, bringing its total cost reduction target to $240-$310 million, including reductions it announced in April 2022.
However, Canopy Growth said it will continue to pursue its U.S. strategy through Canopy USA, LLC, with the goal of remaining listed on both the TSX and NASDAQ.
“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” said Canopy Growth CEO David Klein. “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.”
In addition to asset reduction, Canopy Growth will undergo a brand and SKU optimization, which is expected to reduce Canadian in‑market brand and SKU counts by approximately 25% and 50%, respectively.
Canopy Growth reported a net revenue of $101 million in the third quarter of fiscal year 2023, down 28% from the third quarter of fiscal year 2022. The company attributed the decline to “increased competition in the Canadian adult-use cannabis market,” along with a drop in its U.S. CBD business, weaker performance of its Storz & Bickel and This Works brands, and the divestiture of C3 Cannabinoid Compound Company GmbH.
The company reported a $267 million net loss in the third quarter of fiscal year 2023, representing a $151 million increase in the net loss from the third quarter of fiscal year 2022. Canopy Growth attributed the higher net loss to non‑cash fair value changes and an increase in asset impairment and restructuring costs.