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Canopy Growth Slips After Plan to Shut 5 Sites, Cut 220 Jobs

Canopy Growth dropped Wednesday after the cannabis company said it would close five sites and cut 220 jobs.

Shares of Canopy Growth  (CGC) - Get Canopy Growth Corporation Report dropped Wednesday after the cannabis company said it planned to close five sites, putting 220 employees out of work.

The Smiths Falls, Ontario, company's stock traded on Nasdaq at last check dropped 2.2% to $28.19.

The sites to be closed include St. John's, Newfoundland-Labrador; Fredericton, New Brunswick; Bowmanville, Ontario, and Edmonton. Canopy Growth also said it would exit its only outdoor operations facility in Saskatchewan. 

"As part of the end-to-end review of our operations that we outlined during our second-quarter earnings call, we have made the decision to close a number of our production facilities," said Chief Executive David Klein. "This was a difficult decision but I believe it is the right one."

The production facilities account for 17% of Canopy Growth's indoor footprint.

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"These actions will be an important step towards achieving our targeted $150 million to $200 million of cost savings and accelerating our path to profitability," he added.

The Canadian cannabis company expects to record total estimated pretax charges of $350 million to $400 million in the third and fourth quarters of fiscal 2021.

"We are confident that our remaining sites will be able to produce the quantity and quality of cannabis required to meet current and future demand," Klein added.

Last week, Canopy Growth shares rose after the U.N. voted to remove cannabis from its Schedule IV designation, leading to a rally in cannabis stocks.

On Dec. 4 the U.S. House of Representatives passed a bill to decriminalize marijuana for federal purposes and to move toward erasing past convictions.