Canopy Growth has closed large greenhouses in Delta and Aldergrove, B.C.
The cannabis company says the closures have resulted in the elimination of approximately 500 positions.
In addition to the closures in B.C., the company says it no longer plans to open a third greenhouse in Niagara-on-the-Lake, Ontario.
Canopy Growth CEO David Klein said in a statement that a review by the company found that the B.C. facilities are “no longer essential to its cultivation footprint.”
“Nearly 17 months after the creation of the legal adult-use market, the Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry,” Klein said.
Steve McLean, who has worked for Canopy Growth since September of last year, says employees were notified on Tuesday of a big meeting scheduled for the following day. At that meeting, employees were “basically told that everyone’s terminated,” McLean said.
“It’s a pretty tough day for everyone to deal with. We all were friends. We were all family. It was a tough thing to walk away from,” he said as he walked out of the company’s Delta facility on Wednesday.
McLean believes the closures have a lot to do with the government “not opening the doors as they should.”
“No dispensaries really in B.C., hardly any in Ontario and where there are dispensaries, there is not a lot of people buying from them,” he said.
“The black market is flourishing and the legal market is having troubles.”
Canopy Growth says it now operates an outdoor production site that is more cost-effective.
Industry analyst Jay Rosenthal from Business of Cannabis says the layoffs at Canopy Growth come as the cannabis industry attempts to “right-size” itself. Last month, Aurora Cannabis Inc. announced plans to cut 500 jobs. Last October, Hexo Corp. says it was cutting 200 jobs.
“These companies have grown tremendously over the course of a very short amount of time and so it’s only natural that they are adjusting to the market size, adjusting to market realities, and adjusting to the regulatory environment in which they’re operating. And unfortunately, that sometimes means downsizing some facilities or doing away with them altogether.”
Last year, global alcohol giant Constellation Brands Inc. announced a deal in August of last year to invest $5 billion in Canopy Growth to secure a 38 per cent ownership of the company.
In August 2018 Canopy Growth was the biggest pot company in the world by market value, at more than $18 billion.
— With files from The Canadian Press