Canopy Growth Announces Cost-Cutting Initiatives, Layoffs

Canadian cannabis producer Canopy Growth Corporation has announced cost-cutting initiatives and layoffs as it further streamlines the organization in its quest to achieve profitability.

The company announced in an April 26 press release that it will take several steps to reduce costs and drive efficiency, including:

• Reducing the cost of goods sold (COGS) in Canopy’s Canadian cannabis business by lowering per-gram cultivation costs through increased cultivation-related efficiencies and facility improvements;
• Implementing a flexible manufacturing platform inclusive of contract manufacturing for certain product formats;
• Rightsizing indirect costs and generating efficiencies across the company’s supply chain and procurement;
• Aligning selling, general and administrative costs (SG&A) with short-term business expectations by reducing third-party professional fees and office costs; and
• Further streamlining the organization to drive process-related efficiencies.

The organizational changes will impact Canopy’s employees “as the company operates with a reduced headcount moving forward,” according to the press release.

The company plans to lay off roughly 250 workers, according to a Reuters report.

Canopy had 3,259 employees, including 2,362 full-time workers in Canada, as of March 2021, according to the news outlet.

RELATED: Canopy Growth Lays Off 200 Additional Employees

“To realize profitability and power growth, we are taking critical actions to further evolve Canopy Growth into an agile organization with a clear focus on the areas where we have the greatest potential of success,” CEO David Klein said in a public statement. “These necessary changes are being implemented to ensure the size and scale of our operations reflect current market realities and will support the long-term sustainability of our company.”

Through these actions, Canopy’s management team expects to generate COGS savings of $30 million to $50 million and reduce SG&A expenses by $70 million to $100 million within the next 12 to 18 months, according to the press release.

“The savings and operational efficiencies generated through these additional steps reinforce our commitment to driving Canopy to profitability,” CFO Judy Hong said in a public statement. “Achieving profitability in our Canadian business is critical to the success of our company and will ensure we can continue investing in our key strategic growth areas including US THC to build significant long-term value."