The cannabis giant has cut down operations on three continents in order to reduce its cash burn.
Canopy Growth (NYSE:CGC), one of, if not the largest cannabis company to exist, today announced that it would be ceasing operations across three continents, representing a continued pullback on its ambitious cash-burning goals.
The company has exited all operations in South Africa and Lesotho, has shut down its indoor facility in Yorkton, Saskatchewan is ceasing its cultivation operations in Colombia, and finally, is ceasing farming operations in Springfield New York.
The Ontario-based cannabis company also said it is eliminating 85 full-time positions, most of which will be cut from the Colombian operations. This announcement comes off the back of an announcement that CGC would be temporarily letting 200 staff go just two weeks ago, following the temporary shutdown of 23 dispensaries due to coronavirus.
In the recent announcement, the company stated that it expects to incur a loss of approximately $700-800M, pre-tax charge for the Fiscal Q4 of 2020. This follows a massive net loss of $375 million for the quarter ending September 2019, and an even greater $1.28 billion loss in the June quarter last year.
Though many wonder if this is the beginning of the end for Canopy's exorbitant cash burn, following the hiring of the company's new CEO, David Klein in January of this year.
On the downsizing, Klein stated that it is all in line with his vision for the company:
"When I arrived at Canopy Growth in January, I committed to conducting a strategic review in order to lower our cost structure and reduce our cash burn," Klein said in a statement.
"I believe the changes outlined today are an important step in our continuing efforts to focus the company's priorities and will result in a healthier, stronger organization that will continue to be an innovator and leader in this industry."
Canopy, like virtually all other cannabis companies, has experienced a steady decline in stock prices, going from upwards of USD $52 per share in April of last year, to now less than USD $15. One can only hope that the decreased operations globally will minimise Canopy's cash burn, and reshift the company's focuses to essential operations with an immediate return on the horizon.
To learn more about Canopy Growth, visit the company HQ here.
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