Canopy Growth announces additional cost reduction program

Canopy Growth announced that it is transitioning to an asset-light model in Canada by exiting cannabis flower cultivation in the company’s Smiths Falls, Ontario facility, ceasing the sourcing of cannabis flower from the Mirabel, Quebec facility, and moving to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts. These changes come in addition to multiple cost reduction activities within FY2023, including the divestiture of Canopy Growth’s Canadian retail operations, the organizational restructuring of certain corporate functions, and the closure of the Scarborough, Ontario research facility. As a result of the cost reduction initiatives undertaken in fiscal 2023, the company intends to close its 1 Hershey Drive facility in Smiths Falls, Ontario, in addition to reducing headcount across the business by approximately 60%, including 800 positions impacted by the changes announced today, of which 40% are impacted immediately. Management expects these cost reduction initiatives will reduce annual Cost of Goods Sold and Selling, General & Administrative expenses by a combined C$140-C$160 million over the next 12 months, bringing the total cost reduction target to C$240-C$310 million inclusive of the reductions announced in April 2022. Canopy Growth continues to progress its U.S. strategy through Canopy USA, and is committed to remaining dual-listed on the TSX and the Nasdaq. Based on our current revenue run rate and these cost reduction initiatives, management reaffirms its expectation to achieve positive Adjusted EBITDA in FY2024, with the exception of investment in BioSteel.