Canopy Growth (CGC) - Get Report said it’s planning to take a C$700 million to C$800 million ($523M to $598M) charge in connection with the closure of two of its greenhouse facilities and the elimination of 500 jobs.
The Canadian based cannabis provider blamed slower than expected growth in the Canadian recreational market for cannabis and changes in Canadian laws allowing outdoor commercial cultivation of marijuana.
The greenhouses, both in British Columbia, account for about 3 million square feet of licensed production space, according to the company. Canopy will also not move forward with a third greenhouse facility in Ontario, according to a statement.
“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,” CEO David Klein said in the statement.
The company expects “to record estimated pre-tax charges of approximately $700-800MM in the quarter ending March 31, 2020 reflecting today's announcement as well as additional changes related to its organizational and strategic review,” according to the statement.
Shares of Canopy Growth fell 33 cents, or 1.9%, to $17.42 in after-hours trading.
Elsewhere, cannabis stocks were generally higher Wednesday on a strong day for the broader markets.
Tera Tech (TRTC) shares fell 0.76 cents, or 6.46%, to 11.01 cents.
The Horizon Marijuana Life Sciences (HMLSF) ETF rose 20.98 cents, or 3.97%, to $5.50.
The S&P 500 index rose 126.75 points, or 4.22%, to 3,130.12.