When Canopy Growth co-founder Bruce Linton was still CEO, he moved to rapidly expand the Canadian cannabis company’s footprint around the world, to Africa, South America, and the US, among other places. Much of this expansion took place in 2018 and 2019, following a $4 billion investment from global alcohol giant Constellation Brands.
Last year, Linton was abruptly ousted. While the exact details remain unknown, disagreements over this strategy, which was yielding a low return on investment, played a significant role. Now, Canopy’s new CEO, who came from Constellation, has started to reverse Linton’s moves. (As Cannabis Wire noted, much of Canopy’s pre-investment executive team and board has now been taken over by Constellation.) Canopy announced Thursday that it was cutting operations in Africa, South America, the US, and Canada, resulting in the elimination of 85 full-time jobs.
Several North American cannabis companies have announced cutbacks in recent weeks, citing COVID-19, as Cannabis Wire reported, and continues to track. Canopy did not mention COVID-19 as a factor in these operational changes. Indeed, long before the pandemic, cannabis companies were struggling with market and regulatory realities that did not align with the hockey stick projections from just a couple of years ago.
In Canada, Canopy is shutting its cultivation facility in Yorkton, Saskatchewan, “to further align production in Canada with market conditions.”
In the US, Canopy will no longer grow hemp in Springfield, New York, “due to an abundance of hemp produced in the 2019 growing season.” They plan to use existing supply to “produce hemp-derived CBD products for the US market.” Just last summer, as Cannabis Wire reported, the company unveiled their US hemp headquarters in upstate New York, attended by the likes of US Senator Chuck Schumer.
In Colombia, Canopy will “cease operations at its cultivation facility” and instead look to “local suppliers for raw materials.” The company still considers the country its “LATAM production hub.” This is expected considering Colombia’s optimal conditions for cannabis cultivation, which, as Cannabis Wire has reported, attracted a number of cannabis companies to the country following the passage of medical cannabis legislation.
In South Africa and Lesotho, Canopy is “targeting a transfer of ownership of all of its African operations to a local business.” In 2017, Lesotho allowed for medical cannabis production and export licenses, a first in Africa, which led to a similar investment and activity boom as was seen in Colombia. (Cannabis Wire published an in-depth feature on the cannabis boom in Lesotho, in partnership with Quartz.)
Canopy CEO David Klein, former chief financial officer of Constellation Brands, said in the announcement, “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.”