Canadian cannabis producer Canopy Growth announced on Wednesday afternoon that it would close two of its cultivation facilities in British Columbia, a move that will lead to layoffs for approximately 500 employees. In what the company is describing as a “production optimization plan,” Canopy Growth will shut down greenhouse operations in Aldergrove and Delta, British Columbia. The company, the largest cannabis firm in North America by market capitalization, also said that it would not move forward with a separate cultivation operation planned for Niagara-on-the-Lake, Ontario.
“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,” the company wrote in a statement. “Additionally, federal regulations permitting outdoor cultivation were introduced after the company made significant investments in greenhouse production.”
Canadian Production Capacity Cut In Half
The British Columbia operations total 3 million square feet of greenhouse space, more than half of Canopy Growth’s cultivation capacity in Canada. The company said that the move was part of its plan to align supply with demand and improve efficiency over time, which will include increased reliance on less expensive outdoor cultivation. Canopy