News

Canopy uproots BC Tweed, 500 jobs cut

Published on March 5, 2020 by Simon Gerard

The B.C. cannabis community took a huge hit this week, with Canopy Growth cutting around 500 jobs as they suddenly closed their BC Tweed facilities in Delta and Aldergrove. On the morning of March 4, all staff at both facilities were called into a meeting, where they were told everyone was terminated immediately. Canopy Growth also announced they will no longer be opening a third greenhouse in Niagara-on-the-lake, Ont.

A press release later that day from Canopy explained the situation under the title “Canopy Growth Announces Production Optimization Plan in Canada.” It has a nice ring to it for any stockholders, but not for the 500 B.C. residents out of a job. Looking great in press releases when these facilities opened in February 2018, the reality one year later is three million square feet of empty production space. This news comes one month after Aurora Cannabis announced the exit of CEO Terry Booth and the elimination of around 500 full-time staff members.

CEO David Klein said in a statement: “When I joined Canopy Growth earlier this year, I committed to focusing the business and aligning its resources to meet the needs of our consumers. Today’s decision moves us in this direction, and although the decision to close these facilities was not taken lightly, we know this is a necessary step to ensure that we maintain our leadership position for the long-term.”

This comes as another massive sign that the largest players in legal cannabis were vastly overreaching with their production plans. The press release also states “The Canadian recreational market has developed slower than anticipated, creating working capital and profitability challenges across the industry.”

While Canopy Growth didn’t take any direct shots at the government in their press release, Steve McLean, a now-former employee, was quick to as he left the Delta facility. He told Global News that the closures had 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.”

But Canopy’s press release did mention one interesting point in regards to government hurdles: “…federal regulations permitting outdoor cultivation were introduced after the company made significant investments in greenhouse production. The company now operates an outdoor production site to allow for more cost-effective cultivation, which will play an important role in meeting demand on certain products that rely on cannabis extracts.”

When it comes to flower, quantity over quality only appeals to investors and not the bulk of consumers, especially when they can sometimes find better quality and prices in the black market. But prior to outdoor growing being an option, licensed producers could only pitch costly indoor grows for any scale production. And nobody scaled bigger than Canopy. Now with cheaper outdoor production and popular extract-based options like vapes, drinks, and edibles, we might see a realistic and sustainable Canopy Growth emerge. That said, Canopy has delayed their drinks and vapes with customers and stockholders waiting until then to decide how realistic and sustainable they really are.

— Simon Gerard