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Canopy Growth takes billion dollar hit, exits Africa

The world’s largest cannabis company, Canopy Growth, lost over C$1,3 billion dollars in the year ending March 2020.  At R12,25 to the Canadian dollar, the loss in rand terms would have amounted to almost R16 billion! 

Canopy Growth reported in May 2020 that revenue had grown 67% over the previous year to C$440 million, but costs went through the roof. The main cause of pain was the hefty restructuring bill of C$623 million. Part of this went on closing down Canopy’Growth’s extensive African operations, but even that considered, admin and sales costs of C$693 were also far too high relative to revenue. Eighty five head office jobs were chopped and retrenchments happened throughout the organization.

The huge loss of C$1 387 440 is almost double that of the previous year (C$712 025) and worse than the market expected. On 16 April 2020, Canopy Growth pre-empted the bad news by retrenching 85 senior managers and restructuring as follows:

Africa 

Canopy Growth plans to exit its operations in South Africa and Lesotho, targeting a transfer of ownership of all of its African operations to a local business.

Canada 

Canopy Growth will shut down its indoor facility in Yorkton, Saskatchewan, to further align production in Canada with market conditions. The Company is confident its production capacity in Canada will meet consumer demand into the future.

Latin America

Canopy Growth will cease operations at its cultivation facility in Colombia, moving to an asset-light model that leverages local suppliers for raw materials and Procaps for formulation and encapsulation activities as outlined in the previously announced agreement between the two companies. These activities will support the position of Colombia as the Company’s LATAM production hub and the ongoing development of its cannabis industry.

United States

Canopy Growth will cease its farming operations in Springfield, New York, due to an abundance of hemp produced in the 2019 growing season. The Company will continue using this supply to produce hemp-derived CBD products for the US market.

 

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